I need to start with a disclaimer so I don't give the impression that I didn't play as a child, because I did. Dudley Mitchell and I dug to China. Alex Lewis and I had a tree house. I had a swing set, and a fort in the woods and rode my bicycle down the street to Bill Ailor's house. Tony Spiva (Economics professor from UT Knoxville) brought a live cheetah to our Y Indian Guide meeting when it was at our house. I caught a kitten in the hayloft at Grandma's house and it was my cat for many years. I played little league and all that stuff. Dad pitched to me in the yard, but I had to field my own home runs if we didn't have anybody fielding. And I joined Boy Scouts when I was 12 which led to a life-long hobby of backpacking which is still how I play.

That said, adult discussions at home more often involved the stock market and business opportunities than children's stories, but everyone could participate. After I was 8 years old, every fall I offered and got a fixed price contract to remove snow from the driveway and sidewalk for the winter season - and some years got paid for doing not much and other winters I knew I was working way too cheap, but I always had money to spend on Christmas presents.

When I was nine years old I had about $85 from birthday and Christmas money that I wanted to invest. There were always discussions of stocks and the market at home. I had a relative that had worked the Texas oilfields for Occidental Petroleum during the oil boom days decades before. He spoke highly of them and continued to follow their stock. I decided to buy 3 shares of Occidental Petroleum at $27. That would have worked except commissions on odd-lot trades in those days would have eaten the whole amount, so my dad said he would be my broker. I watched the stock go up sometimes but down a lot over the next several years. 

When I was 12 I told dad that OXY wasn't working for me and I wanted to take my losses and get out. I had some more money by then that I wanted to add to my acount. He asked what I wanted in, so I did some studying for my next stock pick. I was surprised and relieved when he told me that since he was my broker and hadn't executed the prior trade that what I really had in "my account" was the money I had given him three years before, plus some interest. 

Skip ahead ten years to graduate business school finance classes in securities analysis, portfolio management, management of financial institutions, and two semesters on the student-run Educational Investment Fund (EIF) at TCU. We learned all about the efficient market hypothesis, random walks, portfolio management, fundamental analysis, technical analysis, and the inability of an individual investor to consistently "beat the market" on a risk-adjusted basis. I retreated to investing in mutual funds and abandoned a dream of becoming a portfolio manager. 

Skip ahead another twenty years or so to the present. Dad died two years ago. Mom is still managing her own portfolio, and although she adeptly gets updates online throughout the trading day, she is less confident at age 85 that her down days aren't a product of her poor picking ability than the gyrations of a fickle market. So now she wants some help managing her trading account. Her plan is to split the portfolio and hand off part of it to a new account that has me set up as manager. So now - how to manage the portfolio for her? 

I have to start with an understanding of her risk tolerance, but she is as risk tolerant as they come and she views this money as "your inheritance" and not something she needs "to live on". So maybe I have to temper this by my own risk aversion. Also, she has losses she can take against gains or dividends I can generate, so I don't have to manage it in a way to minimize her taxes. 

In looking for investment opportunities I like to start with a broad view. I evaluate the overall state of the global economy, first with the US economic business cycle, pressures on inflation, interest rates, money supply, GDP growth, and comparison to other countries. Then I look at industries and sectors for opportunities, and finally drill down to companies to evaluate. Company evaluation almost always resembles a case study. If you are interested, I will be adding presentations and maybe more blog entries as I get into this project. 

update:

1. Investing - data sources: Federal Reserve Bank of St. Louis
2. File: Monetary Growth Rates
3. File: Monetary Growth Rates
4. File: MZM Money Stock
5. File: GDP
6. File: Fed Funds Rate