My First Job: I Ran a Mutual Fund at Age 13

My first job was a bit odd for a thirteen-year-old – I started a mutual fund. Well, actually a teenage version of mutual fund … more like a stock club.

I called it Capital Trust, and found sympathetic investors among my family and friends. In total, we raised less than $1,000 – enough to buy some odd-lots of a handful of U.S. stocks. I remember our biggest position was Addressograph-Multigraph, a company that no longer exists today, having been swept aside by advancing technology.

Our quarterly reports were priceless, brimming with youthful optimism. At least for the first couple of quarters. Then the market tanked, and every one of our positions took a loss. So the subsequent quarterly report was priceless in a different way – the awkward attempt of a thirteen-year-old to explain macro-economic headwinds using multi-syllabic words I barely understood.

I felt so badly that I decided to make all of my investors whole, out of my own pocket. I had to mow a lot of lawns to make enough money to pay everyone back.

The list of my mistakes is as long as your arm:

• I plunged into a field in which I had no experience (not really much of a problem) and little understanding (actually, a big problem).
• I did not raise sufficient capital to run the company on a sustainable basis -- nor did I have any revenue (I didn't charge any fees!)
• My optimism that I could beat the market was misplaced. (And, in fact, that same misplaced optimism bedevils many investors to this day.)
• My investment approach – stock picking – was the exact opposite of what I now advocate. Today I run a financial advisory firm -- Personal Capital -- where we recommend broad diversification as the first principle for long-term investors. (By the way, if you had invested $100 in the S&P 500 then, it would be worth $5,800 today.)

But despite all my mistakes, I’m glad I did it.

The thrill of building a venture on my own was energizing. The disappointment of the investment losses was sobering, in a good way. And the fact of being responsible for the endeavor – both it’s successes and failures – gave it sharp reality.

Capital Trust was a tiny venture, but not an insignificant one. A failure as a business, but a great education.