ONLINE : SEPTEMBER
25, 2000 ISSUE
Who Wants to Be a Teen
Television viewers may dream of becoming
millionaires. But David Leung is already halfway there. And he's only 17.
The Massachusetts Institute of Technology freshman's wealth comes not from a
get-rich-quick scheme or his parents, but from seven years of investing. The
Palos Verdes Estates (Calif.) resident started at age 10, when his parents gave
him $7,000 in Microsoft stock for winning a math contest.
GETTING SERIOUS. Since then, Leung has parlayed $50,000--from gifts and
jobs installing, repairing, and assembling computers--into $450,000. His
favorites include Intel, which is up twelvefold, and Microsoft, which has
multiplied almost sixteenfold since he acquired it, to $112,000. (An additional
purchase is valued at the same amount.) Other picks include Coca-Cola and
technology companies Tellabs and Computer Associates. At one point, Leung was
worth $550,000, but his fortunes eased as Microsoft's antitrust headaches
As Leung was amassing his sizable nest egg, he watched other students spend
their cash on cars, clothes, and music. That worried him, since, after all, his
generation ''really can't rely on Social Security.'' To help teens get serious
about investing, Leung designed three Web sites (http://library.thinkquest.org/3096,
So, what advice does Leung offer teen investors? First, take advantage of the
fact that mom and dad are paying the rent, and save money. Then, get a parent to
set up a custodial account and ''buy a few shares in solid companies that are
industry leaders.'' Leung likes Intel, Lucent, and Coke. He recommends index
funds for those who are uncomfortable picking their own stocks.
Leung likes the Motley Fool Web site for its explanations of investment
concepts. But when researching stocks, he looks up Value Line at the library.
When Leung has a prospect, he often waits for the market to dip to buy. That
way, he can get a stock when its price-earnings ratio is close to its
earnings-growth rate. Leung looks for earnings growth of at least 15%.
Because it's almost impossible to predict which way the market will go, Leung
thinks day trading is akin to gambling. Instead, he believes it's safer and more
profitable to hold on for years. And the one undeniable edge Leung and his
investing peers share is that time is on their side.
BY ANNE TERGESEN