The Lemonade Times Vol. 18

This week we're going to make compound interest even EASIER to understand. (Don't worry, even 3rd graders can totally get it.) Then we'll learn what it really means when people say "the economy is growing." And in Lemonade Picks, get ready for something SUPER cool. We're talking about quantum computers. They're like computers from a sci-fi movie, except they're real and they're here!

Oh, and the Fed has a brand new boss. Let's go! 🍋

Stocks had a wild ride last week, but the Dow Jones hit a brand new ALL-TIME HIGH on Friday! 🎉

Here's what happened:

Monday and Tuesday: Mixed Mode 🤔 The week started bumpy. The 10-year Treasury yield kept climbing, which made tech stocks like the NASDAQ and S&P 500 nervous. (Remember from last week? Higher yields = scared investors!) The Dow held up okay, but the other indexes wobbled.

Wednesday and Thursday: NVIDIA to the Rescue! 🚀 After Wednesday's market close, NVIDIA reported AMAZING earnings. By Thursday, tech stocks were back on fire and the whole market bounced. The AI excitement is real!

Friday: Dow Hits a Record! 🏆 The Dow Jones climbed 294 points to a record-high close of 50,579. The good news? People are hopeful that the U.S. and Iran might FINALLY reach a peace deal.

Three big events shaped the week:

1. Kevin Warsh became the new Fed Chair! 🏛️ On Friday, May 22, Kevin Warsh was officially sworn in as the new boss of the Federal Reserve, replacing Jerome Powell. In his first speech, he said the Fed's most important jobs are keeping prices stable and helping people have jobs. President Trump wants Warsh to lower interest rates fast. But Warsh has to balance that with fighting inflation. Tough job!

2. Iran Peace Talks Heating Up 🕊️ The U.S. Secretary of State said there are "good signs" that a peace deal could be coming soon. But they still disagree about some big things, so investors are watching VERY closely.

3. Earnings Were Mixed 📊 Some companies did great. Some didn't. NVIDIA's huge earnings beat lifted the whole tech world, but other companies struggled.

1. Iran Deal Watch 🕊️ — Will the U.S. and Iran finally sign that peace deal? Markets are waiting on every headline!

2. April PCE Inflation Report 📊 — This Thursday (May 28), the government releases the April PCE report. PCE is the Fed's favorite way to measure how fast prices are rising. If inflation comes in HIGH, stocks could wobble. If it cools down, it's party time! 🎉

3. Retail Earnings 🛍️ — Costco reports on Thursday, May 28. These results show how everyday Americans are spending their money. Strong sales = healthy economy!

Last week we learned about compound interest. Remember the snowball that gets bigger and bigger as it rolls down a hill? ⛄

This week, let's make it even simpler. And then I'll show you the COOLEST thing about stocks!

Imagine you have one magical cookie. You plant it in your backyard. After one year, a cookie tree grows, and it gives you 10 more cookies. So now you have 11 cookies!

You plant ALL 11 cookies. Next year, each cookie grows its own tree, and each tree gives you 10 more cookies. So now you have 11 + 110 = 121 cookies!

The year after? You plant 121 cookies. Now you have 1,331 cookies! 🍪🍪🍪

That's compound interest. Each year, your cookies grow more cookies, and those new cookies grow EVEN MORE cookies. The pile gets bigger faster and faster.

Here's where it gets REALLY exciting. Stocks are like the best cookie tree ever!

When you buy a stock (a tiny piece of a company), you become a tiny owner of that company. And what do companies try to do? GROW! They want to sell more products, hire more people, and make more money.

So here's the magic:

Sound familiar? It's the same snowball, but with a COMPANY growing instead of just money sitting in a bank!

That's why over a LONG time, the stock market has grown about 10% per year on average. Companies grow their profits, and their stock prices grow with them. Money you invest in stocks is like planting cookie trees that grow MORE cookie trees year after year. 🌳

Here's something amazing. Banks usually pay you only 1% to 5% interest on savings accounts. That's slow growth.

But stocks have grown about 10% per year on average over the past 100 years! That's WAY faster snowballing.

Of course, stocks can also LOSE money in any single year. But over many years, they tend to grow bigger and bigger because the world keeps inventing new things, companies keep getting better, and the economy keeps growing.

You probably hear grown-ups on TV talk about "the economy growing" or "the economy slowing down." But what does that even mean?

Let's break it down super simply!

Imagine you live in a tiny town with 100 people. Last year, your town made:

If you add up the value of everything your town made, that's your town's economy!

Now, this year, your town makes 1,100 loaves of bread, 550 toys, 220 haircuts, and 55 houses. Your town made MORE stuff this year than last year! 🎉

That's economic growth! It means your town produced more, sold more, and made more money this year.

There are four main reasons:

1. More People Working 👨‍👩‍👧‍👦 If more people get jobs, they make more stuff and earn more money. Then they spend it, which helps even more businesses grow.

2. New Inventions 💡 Imagine someone invents a machine that makes 10 loaves of bread in the time it used to take to make 1. Suddenly your town can make WAY more bread with the same effort. That's why inventions like the internet, smartphones, and now AI have made economies grow so fast.

3. Better Skills 📚 When people learn new skills (like coding, designing, or building), they can make better stuff and more valuable services.

4. More Tools and Machines 🔧 Better factories, better roads, better computers. All these help workers make more stuff.

Grown-ups have a fancy word for this. They call it GDP, which stands for Gross Domestic Product.

GDP is basically the total value of EVERYTHING a country produces in a year. If a country's GDP grows by 3%, that means the country made 3% more stuff this year than last year. Pretty cool!

For example, in 2025, the U.S. GDP was about $29 trillion. That's a LOT of bread and toys and houses combined!

When economies grow, lots of good things happen:

But here's the tricky part. Growth can't be TOO fast either, because then prices rise too quickly (that's inflation!). The Fed and Kevin Warsh try to find the perfect balance. Just like Goldilocks! 🐻

Get ready, Lemonade Squad. This week's pick isn't just one company. It's a whole new kind of technology that sounds like science fiction. Quantum computers! 🚀

Your phone, your laptop, your PlayStation. All of these are regular computers. They work using tiny switches we learned about a few weeks ago. Each switch is either ON or OFF. 1 or 0. That's it.

Regular computers are AMAZING. They can do millions of calculations per second. But for REALLY big problems, even the fastest regular computers would take thousands of years to solve.

That's where quantum computers come in!

Here's what makes quantum computers so wild. Their tiny switches (called qubits) can be ON and OFF at the same time! 🤯

Wait, what?!

I know it sounds impossible. Even scientists can barely explain it. But thanks to the weird rules of quantum physics (the science of really tiny particles), qubits can do something regular computers can't.

Imagine you're trying to find your way through a giant maze. A regular computer would try one path at a time. Left, right, dead end, back up, try again. It could take FOREVER.

A quantum computer? It can try ALL the paths at the same time! It finds the right answer way, way faster. 🧩

These machines could change the world. Here are some examples:

The quantum world is still very new. The biggest pure quantum companies are tiny compared to giants like Apple or Microsoft. But they're growing FAST. Here are three:

🟢 IonQ (Ticker: IONQ) The biggest quantum company right now. It uses "trapped ions" (charged atoms) as qubits. In early 2026, its sales grew an incredible 755% from a year ago! That's not a typo. 755%! IonQ is now worth about $19 billion.

🔵 Rigetti Computing (Ticker: RGTI) This company uses superconductors (super-cold metals) to make qubits. Smaller than IonQ, but growing.

🟡 D-Wave Quantum (Ticker: QBTS) Uses a special technique called "quantum annealing" that's especially good for solving puzzles.

Even big companies like Google, IBM, and Microsoft have their own quantum computer teams working on this technology!

Quantum computer stocks have been a ROLLER COASTER. They can jump 25% in one day, then fall 10% the next day. Why? Because quantum computers are still REALLY new. Most of these companies don't make much money yet. Investors are betting on what they MIGHT do in 5 to 10 years.

That makes these stocks super risky. They could become huge winners, or they could fizzle out. Nobody knows for sure!

Five questions! How many can you get right?

Q1: Why are stocks like a super-powered version of compound interest?

Q2: What does GDP stand for?

Q3: What is the BIGGEST difference between a regular computer and a quantum computer?

Q4: Who is the new boss of the Federal Reserve?

Q5: Why are quantum computer stocks SUPER risky?

🕵️‍♀️ Check Your Answers!

Scroll down to see if you are a Wall Street Wizard.

"Summer, last week you showed how Anna had MORE money than Ben at age 60, even though Ben put in 4 times more money! That's wild. So... when's the best age to start investing?" — Mia, age 9, Texas

Mia, GREAT question! And the answer is going to blow your mind. 💡

The best age to start investing is RIGHT NOW. Whatever age you are. 🎉

Why? Because of compound interest! Remember the cookie trees? Every single year that you wait, your future cookie pile gets smaller. Every single year that you start EARLIER, your future cookie pile gets bigger.

Here's the wild math. If you start investing $100 a year at age 10 instead of age 20, you'll have more than DOUBLE the money by age 60. Same amount each year. Just an earlier start!

Now, you might be thinking, "But Summer, I'm a kid! I don't have any money to invest!" That's okay! Here's what you can do right now:

Even a tiny amount of money invested when you're 9 can grow into something amazing when you're 50. That's the magic of starting early!

Mission 1 — Stock Tree Drawing 🌳 Draw a "stock tree" on a piece of paper! Pick a company you like (like Disney or Apple) and draw a tree with that company's name. On each branch, write something the company does to make money. The more branches, the more "fruit" (profits) the tree can grow!

Mission 2 — GDP Detective 🔍 Look around your house. Count 10 things that were made somewhere. Where were they made? (Check the labels!) Every single one of those things added to some country's GDP. Cool, right?

Mission 3 — Quantum Curiosity 🔬 Ask a parent to show you a quick video about quantum computers on YouTube. Pick one quantum computer thing that sounds the COOLEST to you. What would YOU want a quantum computer to figure out for the world?

Summer's Reflection: This week we learned that stocks are like super-powered cookie trees. We learned what it means when an economy grows. And we peeked into the future with quantum computers. Here's the most important thing: the smartest investors aren't the ones who get rich quick. They're the ones who plant their trees EARLY and water them PATIENTLY. The cookies (and the shade!) come later. Keep planting, Lemonade Squad. See you next week! 🍋

Sources: CNBC, The Street, CNN, 24/7 Wall St., The Motley Fool

📌 This newsletter is for learning only. Investing always carries risk. Always ask a trusted adult before making any money decisions!

Until next time, Summer 🍋

Until next time,