LB and James were best buddies.  They had been since kindergarten.

They loved to do everything together. They walked to school together, played basketball almost every day, and played Play Station games. If you saw one, you saw the other. They generally thought alike, except when it came to money.

James was more serious than LB. He wanted to make money to buy more things and start saving for his future. He knew he would be leaving for college soon. He decided to invest in CDs.

LB didn't know much about investing but wanted to do what his friend did. He did some research and  decided to invest in the stock market. James told him that was not a good idea, but LB thought he could make some quick money.

James remembered from his Economics class that CDs, certificates of deposit, were one of the safest forms of investment and was insured by the FDIC. He put $1,000 into a CD for six months. At the end of six months, he could get his money and interest out if he wanted, or he could let it roll over for another six months to earn more interest. He would lose money only if he took it out before six months because the bank would penalize him for early withdrawal.

Despite a warning from his father and from James, LB decided to invest all of his savings , $1,500, in the stock market. He wanted to make a lot so he put it in a risky stock. During the first week, stock prices soared. But in the second week, prices tanked, and LB lost most of his money.

At the end of six months, James' $1,000 that he had put into a CD had made money. He was so excited to make money, he rolled all of it over into a new CD that would mature in another six months.

For James, the end of 6 months was heartbreaking. He had spent money to hire a stockbroker to help him invest. He started out with $1,500 but now he only had $1,100. His risk did not pay off. He invested during a time when stocks were losing money for a long period of time (bear market). I guess that is why they say investing in stocks is not for the faint of heart.