Sunday, February 14

Go Trade Young Man!

The firm i work in is a sponsor of an international NGO called SIFE (see, which brings together business and university students to assist the students to learn how to make a difference to their communities through projects. This in turn provides them with valuable training on a variety of different ways ranging from teaching the basics of banking to understanding cashflows to revenue generation to economics. As part of this engagement, volunteers from firms become part of business advisory groups for particular projects and help guide/assist the students in achieving the objectives of their projects. Look at the website, these young chaps are actually making a huge difference.

Personally speaking, I have been involved with SIFE since 2008 and it has been a very exciting time. To sit there with the students and see their bright, passionate eyes light up when they talk about how they are making a difference is amazing. I have sat in meetings where I have had students helping a bunch of villagers in Ghana setup their own cooperative to weave baskets and sell them, training NEET youngsters how to improve their financial well being in Birmingham, teaching some long term unemployed how to explore additional opportunities for employment by using job search databases etc. in Swansea, etc. You know what makes me humble? It is to see these kids wanting to change the world, having a good design to do so, the determination to succeed and the confidence to actually deliver. We are helping them to become better managers and actually make a difference., something that actually makes me proud to work for HSBC.

As part of this exercise, I am on the business advisory group for the London School of Economics and Political Science. This kicked off in late November and I have been in touch with a very bright young man on email and finally managed to meet him and another colleague last week. This is a post about that conversation. The team conducts a stock and foreign exchange trading game for school students (usually 6th Form) in London. Their objective is to familiarise the students with the logistics of trading, the basics of demand and supply, the stock market, the Foreign Exchange Market, etc. In the initial presentation, they said that they hoped that the school students would decide to go into higher university education, pick economics or business studies. All laudable objectives, but then I asked the two SIFE students, what’s in it for you? The answer I got back was “fun”.

Which is good, but I would have expected some more concrete outputs and benefits as an answer from the SIFE students but more about that later. I also inquired about their business plan. Now I have seen a presentation, but unfortunately, I hate presentations. Far too many times, presentations are used as documents and one can go animation / graphic crazy. If one is talking about a business plan or a project plan, a word document helps to clarify exactly what they are trying to achieve, show who are involved, timelines, budgets, measures of success, etc. etc.. We are going to work on putting a business plan together, so that it’s very clear on what this project will do and deliver. More importantly, this will become sustainable and when the next year’s LSE SIFE students come in, they can build on what has already been done rather than start from scratch.

But to go back to the success criteria, I delved a bit deeper into it. I asked them about how they are going to measure their success? What is in it for them? It has to be a measurable quantity, because you can’t manage what you cannot measure and if we are going to run a proper sustainable business, then clear metrics are important. I suggested that they might think about actual trading or run a fantasy trading game where one’s progress can be measured.

I specifically gave an example of an experiment that I am running with my son, who is now 14 years of age. I have been training and teaching him on the basics of stock market investments since he was 12. Every quarter he gets £100 to invest, I ask questions about his stock selection but I will never say no. Over the past 18 months or so, he has now invested a tidy sum. Till about the middle of last year, he was seriously in the red, but now he is up about 33%. Given that I have told him that this money that he is making will help his education and buy his first car (and presumably to impress girls…), you can see the motivation behind him being pretty clued up in trying to understand the intricacies of the UK market.

I am using First Direct as (FD) our broker; it is one of the cheapest to trade (a tenner per trade) and has a good set of analytical tools. The downside of using FD is that it does not allow you to trade US stocks, which is a shame. The students got quite excited about this and wanted to discuss it more. We talked about potentially giving prizes to the highest return earner per period (quarter, six monthly, yearly), perhaps linking with our First Direct colleagues to provide some help, etc. I am meeting them this week to take this to the next stage.

What I am quite excited about is that this project is educating more students to take responsibility for their own financial results. Higher education is obviously going to become more and more expensive. If they can be helped to start on a stock trading trajectory from their early days, with dividends reinvested, they would definitely go into and come out of higher education with less debt and better financial health than now.

What else can we tell them? What am I missing? If you had a 14-15 year old brother, sister, son or daughter, what can we do to help them as far as stock market trading is concerned? Any links? Remember that the actual project is being done by undergraduate LSE students who are in full time education, so we have to propose simple low impact solutions, nothing that will suck up major amounts of time, money or energy can work. Any ideas? Has anybody else across the world seen anything like this? Is there something concrete that the bank can do?

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