Long-Term Investing Ideas in a Volatile Market
Simon recently spoke with a $35 billion global asset manager about how they're navigating the market volatility. The key takeaways are to think long term, tune out the noise...
The compounding effects of long-term investing are even more powerful when you start at a young age. Investors Maya and Soren Peterson discuss why they already got started investing as teenagers, how they're approaching their analysis, and what their peers tend to think about investing and the stock market.
December 9, 2021 – By Simon Erickson
One of 7investing’s core principles is that “time is on your side.”
After all, it takes quite a bit of time for great companies to actually pull off their battle plans. It takes years — not weeks or months — in order for them to grow into new markets and develop valuable new products. Patience is certainly a virtue for visionary and committed leaders.
And for investors, it similarly pays to have a buy-and-hold mentality. The power of compounding allows for annual returns to build upon each other every single year. Great investments that are held for long periods of time will geometrically multiply your initial capital. That could turn even a modest initial investment that is left alone for decades into a future dream home or an early retirement. There’s a good reason why Albert Einstein described compounding as the eighth wonder of the world.
As such, compounding is even more beneficial for those who start investing at a very young age. They are the ones who will have the maximum amount of time in the market and have decades to amplify their returns.
But is investing early easier said than done? Aren’t there a million other things in your late teens or early twenties that are also distracting your mind and your money? Are high-school and collegiate students somewhat intimidated by the stock market, especially after hearing scary stories about the volatility of stocks like GameStop and AMC? Is it possible to capture the awesome benefits of investing at a young age…but without stepping on any landmines or making huge mistakes along the way?
To help us answer those questions, we’ve brought in two incredible investors. Maya and Soren Peterson are nineteen and seventeen years old investors (respectively) who have embraced the opportunity to start investing as early as possible! They recently wrote and published a book called Early Bird: The Power of Investing Young, as a way to help other young investors maximize their potential gains in the stock market.
In this exclusive interview, Maya and Soren spoke with 7investing CEO Simon Erickson about why it’s so important to get started investing as soon as possible. They describe their reasons for writing the book and explained what they look for when searching for companies. They also were candid about some of the mistakes they’ve made along the way, and why investing shouldn’t be intimidating — no matter what your age is.
Maya first met Simon in 2012 at an investing event (she was in middle school at the time) and Soren met 7investing advisor Steve Symington at the Boston Omaha shareholders’ meeting earlier this year (“Steve’s much taller in real life than on video!”). This was a fantastic conversation that is truly empowering to others. We look forward to featuring Maya and Soren’s perspective several more times in future conversations.
Publicly-traded companies mentioned in this interview include Boston Omaha, Chewy, and Trupanion. 7investing’s advisors or its guests may have positions in the companies mentioned.
Simon Erickson 00:00
Hello, everyone, and welcome to today’s edition of the 7investing Podcast. I’m 7investing founder and CEO Simon Erickson. I’m really excited to be back in the saddle again, we took a short break there for the holiday for Thanksgiving. It’s really nice to be back on the podcast and welcome some new perspectives to our show.
Simon Erickson 00:17
Today we’re going to be talking about long term investing. Of course at 7Investing we’re always excited about investing for the long term. And what better advantage do you have to be a long term investor than to get started as soon as possible? And so I’m very excited to welcome my guests today, Maya and Soren Peterson are both investors. They’re both very young investors. And we’re going to be talking about the power of compounding and getting started with investing at an early age. Maya first and foremost, welcome to the show.
Maya Peterson 00:47
Thank you so much for having me.
Simon Erickson 00:49
It’s a pleasure. Soren. It’s very nice to meet you as well. Welcome to our podcast.
Soren Peterson 00:52
Thank you for having me as well. It’s great to be here.
Simon Erickson 00:55
Well, let me get started. You guys have both actually written a book that’s available on Amazon. It’s called Early Bird the power of investing Young. Maya, I want to start with you on the first question for this is what prompted you to want to write this book already?
Maya Peterson 01:10
Yeah, I’ve always been a very curious person. So when I was about nine, I started investing, and I was handed throwing money by Gail karlitz. And as I was learning more about investing and you know, writing emails to random professionals, and having them respond to me and talking to them about how to invest what companies to look at, I just began compiling all of my knowledge and everything I’ve learned over that time and thought it would be helpful for me, and just as helpful for other people.
Maya Peterson 01:38
And honestly, now that I’m in college, reviewing technicals for interviews, I still go back to early bird to make sure I have everything nailed down. So it was really helpful back then to make sure I understood because I think the best way to learn is to teach. And it’s still helpful to this day.
Simon Erickson 01:55
My goodness, starting at nine, that’s amazing. That is truly incredible to be starting at study at such a young age. Maya I believe you said you’re 19 Now, so you’re a decade into your investing journey, what some of the first things that you would say that you learned the most about investing in this in this whole progress?
Maya Peterson 02:11
Probably humility, it’s the best to go in, be the dumbest in the room, learn the most in the room, and be able to make mistakes. I think from a young age, that’s kind of a key power that Soren and I like to talk about if you’re young, and you’re only investing $25. And that money would have otherwise be spent on like candy or hot chocolate or coffee or something like that. There’s not a lot at stake or at risk. And so it’s better to learn what’s good investments, what’s bad, how you and what mistakes you’ve made with that money, too. So that’s definitely something I learned.
Simon Erickson 02:43
Maya I love that advice. I love the quote about being the dumbest person in the room. That’s the definitely the way you get smarter about things. So and one thing that I know that you contribute to the book was a lot of interviews with some really high profile other investors. Can you talk a little bit about those? And also what you learned from them along the way? Yeah, definitely.
Soren Peterson 03:01
Yeah definitely. So I had the opportunity of talking with a lot of really great investors, like Ian Cassel, who’s head of the micro cap club and founder of it. So he had a lot of really interesting insights about how he got started investing, found micro caps. Yeah, like he started when he was get going just about to college age, and invested his own college fund, which was a pretty interesting story.
Soren Peterson 03:26
And then I also got to speak with some great people like Annie Duke, who was a poker world champion, because she knows all about decision making, which is obviously a huge portion of investing. So that was really a great opportunity as well. And also, last, but definitely not least, we also have Emily McCormick, who is a banking master going into one of the most complicated industries and describing it very simply. So it’s very easy under to understand.
Simon Erickson 03:58
That is fantastic. And by the way, Go UMass Amherst go Babson go Rice University go University of Texas Longhorns, or whatever college that you find yourself allegiant to. We’re cheering for you out there.
Simon Erickson 04:11
But I think this podcast is gonna be a really interesting one because we are reaching a younger demographic, a lot of people who are either 17 years old or 19 years old, or kind of when they’re in college might not be thinking about investing, definitely might not be thinking about long term investing at this point.
Simon Erickson 04:26
Let me start with the question of, maybe this one’s for you first, Maya is what would you recommend to someone else who is a collegiate student right now? What would you tell them about investing and maybe what would you tell them is the greatest benefit to starting so early?
Maya Peterson 04:42
Yeah, well, I would echo what I said earlier. Just to start. If you start in, start with a couple dollars, and start looking around your dorm, I have my Brita filter in front of me, I have my honey I have all of these things, you know, looking at the companies that are surrounding you within college.. Things that you use every day, if it’s computers, if it’s Apple (NASDAQ: AAPL), if it’s the food and where your food is coming from, and so trying to look around you and just discover different companies, and just be curious and take college as a way to learn about all ways of your life, including investing.
Maya Peterson 05:18
And I think it would just be very helpful to also foster conversations, if you want to start a little investment club, if they don’t have one, even to join in, and be a part of the conversation and listen in, I think it’s a really great place to learn. But of course, right now, college is very hard. It draws on every part of aspect of your life. So saving, of course, is incredibly important. And I know there’s a lot of support systems in college to, like, we have different instructors that can help you go through and budget and stuff like that. And so finding support systems to to help you learn how to invest and how to allocate your money that will best fit for you.
Simon Erickson 05:58
Wow, that’s very refreshing. It’s something that our audience would definitely support everything that you just said. But let’s walk into your world a little bit here. You know, you’re a university student, I’m sure that when you say things like that to other students that might not be thinking about investing. I would imagine there’s some pushback, you know, people have got to spend their money on beer money or something else other than investing in the stock market. How would you say other students that are 19 or 20 years old, think about stocks and think about investing right now?
Maya Peterson 06:24
Yeah, well, I think it’s definitely Gamestop and all of those things that are headlines on the news, less when I start talking about, you know, Ollie’s Bargain Outlet or something, some little niche company, they’re not as excited to talk about it.
Maya Peterson 06:39
But just saving one extra dollar, if you’re going to go get your mocha latte, maybe get it with normal milk, or maybe don’t get the extra pump and save a couple extra dollars, here or there. And then when you feel confident enough to invest, you have that money. And that little what rain fund, rainy day fund or something like that to chip in. But just \start working on it every day. I know days go by really quickly, but they really do count. And so I think it’s probably important, yeah.
Simon Erickson 07:08
Soren, the same question for you. Maya kind of alluded to the the Gamestop, AMC and the Wall Street bets and the diamond hands and the YOLO and all the things that have kind of taken center stage just last year, it seems like there is a power of the crowds now. It seems like there is an interest in learning about investing.
Simon Erickson 07:26
What are you seeing Soren? |n terms of being a high schooler right now, are other high schoolers interested in investing in the stock market? Or what’s your play on how things look out there?
Soren Peterson 07:36
Definitely. Yeah, so for high school students, I find there’s a lot more interest in it. But there’s definitely not much more information about it. Or at least most people don’t educate themselves more about investing in general, especially not long term investing. It’s all about short term gains, and things like that.
Soren Peterson 07:54
I think my goal has just been to try to turn that into more of a long term pursuit because people think, Oh, 5%, or even 1% is nothing like that’s not like a return. But if you go and look at the compound interest over time, that’s obviously a lot higher. I tried to demonstrate that.
Soren Peterson 08:13
And one of the chapters in the book that I got to write for the second edition, called How to retire from a summer job where I went through and did the math, of if you made $5,000, in a summer for five summers, and just invested all that money, that you could go and retire at the age of 65, just from that money alone.
Simon Erickson 08:34
That is fantastic. The power of compounding, it’s not just about getting in and out within a couple of months, or days or hours. But sticking to the course when you’re when you have the power of compounding on your side. And you’re starting earlier, you’re you get a huge benefit from doing that.
Simon Erickson 08:49
Now let’s talk about stocks. Let’s change gears a little bit and talk about some companies that we like out there. There’s a zillion different ways to be an investor, there is a zillion different ways to be an analyst. Soren, how about you? What is the company that you are interested in or that you’ve invested in? And why did you pick them?
Soren Peterson 09:05
Yeah, so one of the ones I’m watching right now that I invest in is Boston Omaha (NASDAQ: BOMN), which I just went to the meeting in November and saw Steve Symington there. And I know, 7Investing is a big fan of Boston Omaha. For those of you who don’t know, it’s a small kind of like a mini Berkshire or Markel that holds a lot of different companies like insurance, billboards, and much more. Yeah.
Simon Erickson 09:33
And what drew you to that investment? What made you want to invest in Boston Omaha?
Soren Peterson 09:37
Yeah, um, I don’t remember. I think I heard about it from my dad or someone, but it’s just a really interesting opportunity. It’s run by these two young guys, Adam and Alex, out of Omaha, Nebraska and Boston, where it gets its name from and it just seemed really interesting that they were trying to do something different.
Soren Peterson 09:58
Like there aren’t that many companies really they structured the way they’re structured, having like a core business that pays them a lot of cash in the form of billboards, using insurance as a way to invest that. And now finding more and more new businesses, like fiber optics, broadband and things like that as more ways to deploy that capital.
Simon Erickson 10:17
That is fantastic. My final question before I bring it over to Maya again, is Steve Simonton taller than you expected him to be when you met him in person?
Soren Peterson 10:25
He definitely was. Yes. Much taller. Yeah.
Maya Peterson 10:28
I would agree with that as well. I think it’s part of being from Montana, you’ve got to be tough and large to fight off the bears up there. How about you, Maya? What’s a company that you either invested in or are interested in right now and why?
Maya Peterson 11:51
And so just hearing stories about people, you know, who pet have died from cancer, and so they forgot to cancel their auto ship program or something like that. And then Chewy sends some handwritten letters and flowers and oil paintings. And really fostering this, like personalized community, within a very, very large company is pretty unique. And that competitive edge that is something that maybe Amazon, Walmart, and these bigger companies that are also trying to target that pet market is sort of different. So it’s a it’s an interesting taking something that I’ve been enjoying keeping up with since I’ve learned about it.
Maya Peterson 11:52
Yeah, so Chewy (NYSE: CHWY) was brought to my attention about a couple months ago. And recently, they are expanding into pet insurance, I think with Trupanion (NASDAQ: TRUP), a couple days or so ago. But I really liked them because of their customer service and that like intangible assets, sort of a moat that they have. I found it really interesting. I personally like looking at companies very qualitatively, I get very, very attached to them.
Simon Erickson 12:54
Certainly. Some good examples there. Boston Omaha and Chewy, I also mentioned, Trupanion. Three companies they’re all fantastic. They’re, they’re kind of winding this down, I do have another question that I want to ask both of you, which is, you know, we always want to be a long term investor, we always want to say that we’re going to buy and hold something indefinitely.
Simon Erickson 13:10
But of course, it doesn’t always work out that way that every stockl that we buy turns out to be the perfect investment. Maya, I’ll start with you on this question is do you ever get tempted to sell any of the companies that you bought? Or what would be something that you would see that would make you sell a stock?
Maya Peterson 13:26
Yeah, I don’t think I’ve sold anything major yet. I have held through thick and thin, it’s not doing too great, but I didn’t put a ton of money in it because I started. So that sort of the advantage that I was talking about earlier, there’s no significant sums. And I’ve made enough early mistakes with $25 or $10, that it hasn’t hurt too badly.
Maya Peterson 13:49
I’ve also received a lot of advice that when you’re this young, to just kind of wait things out and to give it time and it’s kind of better to close your Schwab account or whatever brokerage account and just don’t look at it for a little bit. And when there’s good opportunities to buy, go do that. But really don’t don’t look and don’t get too hung up on the down.
Simon Erickson 14:10
Makes a lot of sense, Maya. Soren, anything that might make you sell a stock over time.
Soren Peterson 14:16
Yeah, so recently, I’ve been shifting my portfolio away from industrial companies, which when I was getting started was very much the core of my investing style. Boeing, GM, Polaris, things like that, just like building a lot of vehicles for the most part. So I have been selling off quite a few of those positions. Because I just want to go into more like insurance and just some other different industries that I think are better opportunities, but I haven’t really sold any of those at a loss luckily.
Soren Peterson 14:47
And I’ve held them for 510 years in some cases, so I feel like I’ve given them a decent run already. I usually don’t think about selling too often. Whenever I do, I think of the book “100 baggers,” where they talk about how in order to get 100 bagger, you usually have to hold it through being down 20%, or even more so for extended periods of time before you can actually get that 100 times return.
Simon Erickson 15:15
That’s fantastic. I’ve got one last question. As we wrap up the show here today, I’ll actually answer it first myself to give you all a chance to a chance to think about it because I’m going a bit off script. But I wanted to ask what is one mistake you’ve made along the way? We want to make sure that it’s clear to anybody watching the program that no one bats 100% in investing, you’re not always going to be right all the time, you’re not always going to jump in and know everything immediately.
Simon Erickson 15:37
But I’d like to kind of take comfort in having the discussion about realizing that there are mistakes that we make. And maybe we can each all point out one that we run into. Myself, and when I started investing it, you know, putting myself on the spot here was jumping in too quickly, to what I would consider to be the hype cycle. I looked for things that were in the news that were in the headlines and was getting a whole lot of attention, not considering valuations not considering the fundamental business itself, and how they were actually going to capture profits.
Simon Erickson 16:05
Because when we talk about investing, we talked about in compounding, we talk about long term, it’s really a company as a compounder of your capital. And you’ve got to find a way to not just grow the top line in revenue, but actually capture profits for shareholders.
Simon Erickson 16:18
That’s something that I wish that I had known. In my first few years of investing, I was just going out and chasing what was making headlines in the top line growth. Maya how about you? Is there any mistakes you can remember that you made kind of early on, you’d like to pass on to other early investors?
Maya Peterson 16:33
Yeah in that similar vein, I think not asking enough questions. Now, when I go and research a company, I have a whole document of every question. So as I’m going through their 10k, as I answered another question, there’s four more that pop up. And so being able to answer all of those and seek out the resources.
Maya Peterson 16:50
I think also as a woman specifically, it can be hard to look for the right resources or want to go ask people, it can feel intimidating, there’s imposter syndrome, all of those things. And so being able just either when you’re researching a company, when you want to learn more about investing in different people’s philosophies, being okay with asking questions, and making your voice heard is something that I’m still trying to learn but definitely I’ve learned along the way,
Simon Erickson 17:15
Ask more questions. That’s a great one, Maya. Anything to add, Soren? Something that you’ve made a mistake along the way?
Soren Peterson 17:20
Definitely. Yeah, I think always asking more questions is great. No matter how much research you do, you can always learn more. But for personally, I’ve made a ton of mistakes. I’d say most notably, often looking for a lot of growth and statistics like ROIC and ROE as opposed to or not looking as much into price to earnings, price to cash, low price to book whatever you’re using for a given company and kind of sacrificing that often too much so. So I think just waiting for the right price or being okay with letting opportunities go. It’s definitely a mistake I’ve made.
Simon Erickson 18:03
Great one, great one Soren, you mentioned ROIC return on invested capital ROE Return on equity, of course, profitability metrics that show that you’re getting a bang for your buck, from the companies that you’re investing in.
Simon Erickson 18:13
Hey Maya, hey Soren, this is a lot of fun. Thanks very much for joining me on the 7Investing podcast today.
Maya Peterson 18:18
Soren Peterson 18:18
Thanks for having us.
Simon Erickson 18:20
This was great. I really like to unlock these discussions and 7Investing is very committed to the educational component of investing. We do have a student rate that is available for $84 a year for anyone that has a .edu email address. Take advantage of that offer. I think the $7 a month is a pretty low tuition to learn about investing in something that can impact the rest of your life.
Simon Erickson 18:43
Starting in January and February of next year, we’re also going to be having a monthly students only call with 7Investing where you can ask questions in a safe environment. It’s okay because there are no dumb questions. We’re all in this to learn together and to benefit from investing over the long periods of time.
Simon Erickson 19:00
So again, Maya and Soren Peterson. Their book is Early Bird: The Power of Investing Young it’s really a pleasure having both of them on the program here today. Maya and Soren Peterson thanks very much for joining me. I really had a lot of fun.
Soren Peterson 19:14
Thank you for having us.
Simon Erickson 19:16
And thanks everybody for tuning in to this edition of our 7Investing podcast. We are here to empower you to invest in your future. We are 7Investing
7Investing Operations 19:23
Apple (NASDAQ: AAPL) Boston Omaha (NASDAQ: BOMN) Trupanion (NASDAQ: TRUP) Chewy (NYSE: CHWY).
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