It used to be that, if you were a college student who was making money in the stock market, you could brag about it to your friends.
Today, however, you can parlay your success into an appearance on CNBC.
That’s what happened recently to Ben C. Banks, who just completed his freshman year at N.C. State University. Banks, 19, was one of three panelists who participated in the cable channel’s “retail investors roundtable” on April 30.
“I’m a momentum swing trader,” Banks told viewers from a TV studio in Raleigh. “So average holding time is probably about three to seven days. I’m in, I’m out.”
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At its essence, momentum investors seek to profit by capitalizing on existing upward and downward trends. Last year, according to Bank’s calculations, that strategy enabled him to reap a 17.2 percent return after deducting brokerage fees. By comparison, the S&P 500 generated a 13.5 percent return in 2014.
Banks has owned as many as four stocks at a time but typically owns just one or two. Early last week he didn’t own any stocks at all because he considered the market “choppy.”
“When it goes up, it goes right back down. When it goes down, it goes right back up,” he said. “For me, that’s not at all conducive to momentum trading. I’ll be happy to sit it out and wait for my turn.”
Banks isn’t at all shy about his investing activity. He blogs about it at bencbanks.com and at dormroomcapital.com; the latter, which Banks founded, also features blogs from college students elsewhere who play the stock market.
“If you’re a trader and look at the market in the same (way) everyday (without any sort of inclination to the climate of the stocks), it would be like looking at each day’s weather patterns the say way with no regard to whether it is going to be snowing, raining or 100 degrees – it’s just plain foolishness,” Banks wrote in a recent blog post.
For Banks, the blogging is both a vehicle for sharing what he’s learned and a way to “teach myself more of what I know. If I can verbalize it, I’ll probably understand it better.”
Still, Banks isn’t saying how much money he invests.
“A lot of people ask me that,” he said. “I’m not comfortable sharing that yet.”
Banks said he initially came to CNBC’s attention by sending an email introducing himself to a CNBC producer about six or eight months ago. He did so because he knew other college students had appeared on the channel and because he was confident in the soundness of his investment strategy.
Lemonade to stocks
Banks initially invested in the stock market at age 12, when he got his dad to set up a custodial account for him.
“He took a giant leap from ‘let’s open a lemonade stand’ to ‘I want to invest in the stock market,’” said his father, Alan Banks, co-owner of Charlotte homebuilding firm Evans Coghill Homes. “Ben’s been very mature for his age all of his life.”
Ben Banks started out by investing in Nike and Target.
“I had worn Nike shoes before. I’d been to a Target store,” he said. “For 12-year-old Ben, that was all I needed.”
Banks held onto those stocks for several years, finally selling them when he was 16 “because I didn’t make any money.”
Undeterred, Banks then got serious about researching investment strategy and engaged in some good old-fashioned trial-and-error.
“I would make money and then I’d lose money, I’d make money and then I’d lose money,” he said. “It was a frustrating time.”
Banks hit on his current strategy about two years ago and has been refining it ever since.
Alan Banks said that although he may have helped his son get started down the investing path, he can’t take any credit for Ben’s success.
“He’s taken investing to places I didn’t even know existed,” Alan Banks said. “I didn’t know there was a world called technical trading.”
This spring Ben Banks was a student in the introductory business course taught by Deborah Brown, a senior lecturer at N.C. State’s Poole College of Management.
“I know Mr. Ben Banks, and I (had) 700 students this semester,” Brown said. “That tells you something.”
Banks came up to her and introduced himself after the first class.
“You’re going to hear from me,” Banks told her. “I’m going to manage a hedge fund by the time I’m 30 years old.”
“I think it’s possible that he will get there,” Brown added, noting that she has been impressed by Bank’s energy and passion and his eagerness to learn.
But Banks said in an interview that he’s not definite about his career plans.
“Part of me wants to be a hedge fund manager,” he said. “That’s one route I could take if the cards fall in the right direction. ... But overall, I’m open to ideas, open to suggestions and, of course, open to job offers.”