I woke up late the next day and had to hurry to not make dad late. We got to work with only a few minutes to spare. With the term ending on Friday, I didn’t have much to do except go around to each student and offer suggestions. Since dad was already doing just that, I used my time to re-organize the metals storage room and to sort out the scrap pile into reusable and non-reusable material piles. It was good practice.
After work I went home for lunch and caught up on my sleep. My alarm woke me up at two o’clock and I made my way to meet Eva and James for our Zumba class. As expected, Zumba was a lot of fun for Eva and for me, and not so much fun for James. I loved the constant motion and the music and the colorful outfits. It was just so alive. James’ opinion of Zumba would be censored if it was on TV. Like with Hot Yoga, he would be taking a pass on Zumba for the rest of his life. He was going to stick with his running regiment and leave it at that.
Like always, I finished off the day at Uncle Magnum’s school, followed by practice with holding the extended field. The great thing about this type of practice was that I could read or watch Netflix while I was doing it. I’d set up the outer field and turn it on, extending it to include the entire bed inside. That way I wouldn’t fall through the bed. If I was reading, I’d bring the book into R1 with me. If I was Netflixing, I’d leave the computer nearby in reality while I was in R1 so that I wouldn’t lose the wi-fi, which was cut off by the field for some reason. (Light and sound make it though, why not wi-fi?) When I got tired, I’d release the fields for 10-15 minutes before starting again, until I drifted off to sleep.
James met Eva and I the next day at the library after Hot Yoga. We had reserved a break-out room and we each walked the other two through our research and our conclusions. Eva started us off with a discussion of two industries, healthcare and transportation, that had been trending up and down for the past decade and in which directions analysts were expecting them to go. She also highlighted the top local companies in each industry and mentioned some interesting newcomers who were disrupting their industries with new technologies.
After Eva finished, I produced my five folders and discussed the five locally based publicly traded companies that I’d researched. I ended my presentation with a summary of the rumor section of each company and how I thought they’d do in the upcoming quarterly report. As I went through my recommendations, I could see James’ raised eyebrows, but he didn’t say anything or ask any questions when I was done. Instead, he launched into an explanation of how the trading software that we’re going to use worked and how we needed to record our trades. He showed us how the system ignored taxes for the competition, but also explained the real-life consequences of being profitable. He finished by showing us the some of the different types of trades and that was where he lost me. Looking over at Eva, I could see that her eyes had glazed over as well.
“Hold on there, James. That last bit went way over my head. I understood basic trading and short selling, but you lost me when you started talking about options and derivatives.” I could see that he was about to start explaining, so I held up a placating hand and continued quickly, “It’s not your explanation. I get that they’re like an insurance policy and that they can be used to stretch out our available funds. It’s the strategy behind their use that confuses me. With all these choices of ways to purchase stock, I wouldn’t know what was best to use in which situation and I can see that Eva feels the same way.” Eva nodded in emphatically in agreement. “How about if Eva and I gather the information on the various companies and industries, we meet and agree on which direction we think the stock will go in, and then you pick the best type of trade to make the most out of our predictions?”
James gave it some thought and agreed with my suggestion. “With that settled, I have a few questions about your recommendations.”
It was my turn to raise my eyebrows. “Sure. What do you want to know?”
“I understood your position on four of the companies that you chose. For three of them you have the right in line with expectations and for one you have them beating expectations. All that is supported by your research and journal articles and your conclusions makes sense. But the last one, Sun Energy Systems, doesn’t fit. Nothing in their press releases and in the analysts reports that you’ve found would suggest that they’re going to miss their targets by around 10%. You referred to a few rumors about their new technology being a little behind schedule, but where did you get the 10% number and why do you trust the rumors?”
I was pretty sure that I’d get pushback from James about using the rumors and so I was prepared. “The 10% is my conservative number. If the rumors are true, I actually think that they’ll miss their numbers by more, maybe in the 12-15% range.” I didn’t think it, I knew it. 13.9% to be exact. “As to why I trust the rumors, a lot of it is obviously a gut feel, but I think that it’s an educated gut feel. The rumors that I’ve read mostly come from comment threads about the company, but some of the comments that talked about the delays were well thought out. Not the usual ravings and crank that you find in comment sections. They talked about the difficulties with that type of technology and how many companies had failed with it I the past. They also knew the principal scientists involved, their past work experience and how often they’d been late in achieving results.” That last part I’d actually seen in a comment thread, but I probably would have ignored it if I wasn’t looking for some support to justify my downgrade recommendation. It’s much easier to justify something when you know the outcome from the start.
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“Ok. I understand your recommendation better now. But what happens if I still disagree with you? How do we decide what trade should be made?”, James asked.
“If any of us don’t agree, we’re each free to make or not make the trade. We all have our own trading accounts and we’ll each have our own competition accounts. We’re pooling our resources as a team, but we invest individually. For my part, I’ll always tell you exactly how I’m going to invest. What you do with that information is your choice. I can tell you that sometimes my choices won’t make sense to you. Sometimes, I’ll read something or maybe I’ll visit the company and get a bad feeling and I’ll base my trade on that, even if all the analysts are talking up the company. All I ask is that even if you don’t plan on joining me in my trade, that you help me find the best way to trade the stock given my recommendation.”
Eva spoke up, “That’s totally reasonable. I’m in.”
James nodded his assent as well. “I’ll give it some thought over the next few days and figure out how we can get the most out of these recommendations. With reporting season coming up, we should plan to make our trades on Thursday or Friday at the latest.”
“There is one more thing that you need to be careful of.”, James said. “Even if you’re right about a company and they’re going to either beat or miss their quarterly numbers, the market may react much differently to that information from what you would expect. Sometimes a company can report a loss and their stock actually goes up or it could go the other way and they beat expectations and their stock drops like crazy. There are always other factors that need to be considered, such as future expectations or loss of key personnel. I know that we’ve talked about it. I just wanted to bring it up again.”
Our meeting broke up shortly after that and we parted ways. Me to Uncle Magnum’s, Eva to another fitness class that she’d signed up for and James was off for an afternoon run.
True to his word, on Thursday James send us instructions on how to make the trades through our trade accounts. Most were reasonably straight-forward, with only the Sun Energy one being a bit complicated, in that he had us short-selling it. He also sent over a spreadsheet that would help us plan how we intended to allocate our money to the various stocks. That was another way that our choices would differ. Even if we all chose the same stocks to buy, and bet the same way, each of us would be making a different sized bet on those stocks, depending on the size of our trading account and on the degree of confidence that we had in the prediction.
I used his spreadsheet to make my choices and then I printed it out and showed it to dad that evening over a late dinner. I walked him through my folders and Eva’s research, and he asked a few questions. One of those questions was very similar to James’ question about Sun Energy and I gave him the same answer. After that we went over the spreadsheet of how I was allocating our money and he signed it at the bottom to make it official. At the end, he shook my hand and said, “Thank you, Ms. Stockbroker. That was actually more explanation than I’ve ever gotten from my financial advisor, and I suspect that you put more thought and research into your choices than he ever did. It’ll be very interesting to see how your results compare to his.”
We said our goodnights and I returned to my room to practice with my extended field.
The next morning was my last as a teaching assistant for dad. The term was ending, and he wouldn’t need me for the next summer session. He only had eight students signed up for his intro course and he could oversee them himself. With only a month and half left before fall classes started, even those students taking summer classes wanted a break or to travel a bit and so the smaller class size was standard for second term.
Throughout the class, I made sure to speak with each of dad’s students. To some I gave some last-minute advice on their projects and to others I merely gave them my best wishes. The hotel management student had managed not to burn herself or anyone else all semester long, but it was clear that she wouldn’t be pursuing blacksmithing any further. Her project pieces were barely adequate, and she should consider herself lucky if she managed a passing grade. Dad was not an easy grader. You had to earn your grade.
My last goodbye was to Tyler. Now that he wasn’t being a snot, he was back in my good graces and I was free to fully appreciate how good looking he was. I wished him well and we shook hands.
“Too bad that you’re not a teaching assistant for your dad’s other courses. I’m signed up for his 201 class in the fall. Who’s going to tell me if I’m using bad materials?”
“I’ll be back in high school for my Junior year in the fall. I wouldn’t worry about the materials though. I usually spend a few hours here every week working on a few pieces and I always check the inventory and put any bad material aside. It’s actually isn’t all that common to get metals with a lot of impurities. You’d be pretty safe even if I wasn’t checking. My usual workstation is over there in the corner. Make sure to stop by and say hi if you see me working.”
“I’ll be sure to do that.”, he answered and walked away.
I stayed for a bit after class and gave dad my notes on each of his students, along with my opinion of their project pieces, and then I was done. I’d enjoyed being a teaching assistant and I hoped that dad could get me the same job next summer, but I was really looking forward to spending more time sleeping in until school started.