The Heart of Investment
By Anderson Shih
Investing has always been a core operation of many businesses. From public companies like Activision Blizzard to private companies like Valve, investing plays a very major role in any establishment. We know that investments allow companies to proceed with very major projects. But how does it really work?
That’s what Alex He and Connor Fleming from Morgan Stanley taught the young entrepreneurs of the Youth Entrepreneur Society at Morgan Stanley during it’s November meeting.
Mr. He started off the talk with the question, “What is investing?” We all know of the word but what does it really mean? One student responded, “it is a form of providing businesses with funds in order to help it succeed with its projects” whereas another member pointed out that it was “a way for profit” for many. In fact, both are accurate, as investing is about providing businesses with funds in order to help them achieve success in the projects that they’re looking to pursue, in a way that benefits both the businesses and those that are investing in the company, by providing profits to the investors and by giving businesses funds necessary to finish projects and achieve goals.
The main points that Mr. Fleming and Mr. He covered were the assets usable in investment as well as investing methods. For example, there are 4 main assets of investment: Cash, Fixed Income, Equities, and Alternatives. It was repeatedly emphasized that each asset had their own uses. Cash often involves physical money and certificates to redeem money, and Fixed Income usually involves investments such as mortgages, coupons, and others. Fixed Income involves regular payments on a regular schedule. Equities usually involve public investing, sometimes in the form of values of shares, such as stocks. There are two main kinds of stocks, value stocks, and growth stocks. It was explained that Value stocks rely on the inefficiencies of the market, allowing the investors to make a profit that way. However, growth stocks capitalize on the growth of companies within major markets. The last form of investment, alternatives, refers to alternatives from the main accessible forms of investment. These can include venture capitalism as well as investments into private companies. This form of investment can often be seen with private companies.
The last topic the Morgan Stanley investors introduced were methods of investing. One of the core aspects of investing is knowing that investing can be volatile, and acknowledging that. Thus, the investors emphasized not to let emotions affect investments, as using emotions rather than rational thinking can only worsen the situation. They then went on to explain methods such as timing as well as asset allocation, calling timing a risky move and one that can destroy your finances. However, they encouraged asset allocation and diversification, encouraging different portfolios for different goals. Finally, they pointed out that a balanced portfolio is often the safest and the most consistent.
Nearing the end of the meeting, the Youth Entrepreneur Society split into several groups and began to brainstorm ideas for the new startup company projects. Investment is best over time, and Mr. He and Mr. Fleming truly sparked the fire in YES members to start early and to consider it in their projects.
Youth Entrepreneur Society would like to thank our speakers, Alex He and Connor Fleming, Morgan Stanley, and USCCC for making this event possible and, as always, for fueling the minds of our future.