On Jan 24, 4:50 pm, joetaxpayer <joetaxpa...[at]nospam.com> wrote:
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<snip
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I think Joe's advice is reasonable. But suppose the OP is a man in his
early 20s
who has just started to invest. If he invests $300 the first month in
stock ABC,
and that is his entire investment portfolio, it is true that his
investments are quite
undiversified. However, the $300 probably represents a very small
fraction of his
future lifetime savings. (If it does not, he is in trouble no matter
how he invests.)
If he invested $300 in a different stock every month, he will have a
diversified portfolio
in a few years. Investing in individual stocks can yield good after-tax
returns if one
harvests tax losses, as discussed recently here in another thread.

I don't know what the brokerage fees are for the monthly investments
contemplated -- that
is an important consideration.

By contrast, a 65-year old would be crazy to put his entire account in
a single stock,
since the account probably represents his entire lifetime savings.

joetaxpayer wrote:

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OK, I'll be the first, these are not contradictory. But "$100-$300/mo"
and "diversified portfolio" may be (until the portfolio gets larger), as
well as "$100-$300/mo" and "buying shares every month." I started out
at individual stock picking at $100-$200/mo, but I typically only traded
once per year or less, and I was certainly not diversified.

-Will

On Jan 24, 2:51 pm, JBicki...[at]gmail.com wrote:
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Couple of quick things.
1. Dollar cost averaging is the process by which regular and systematic
investments are made to limit potential downside risk of an early
market drop-off. Simply put, you buy a given dollar amount of a given
stock at regular intervals until you have reached your desired
position. In an up market, this will result in lower returns and,
possibly, greater transaction costs. In a down market DCA can reduce
your losses but may still carry higher transaction costs. Its a call
you have to make. As with all things, DCA is subject to risk/return
trade-off.

2. I commend you for starting to save away money each month. Good job!
You want to try and minimize your transaction costs to less than 2% of
your investment. Hypothetically, if it costs you $10 a trade (sorry, I
don't know much about the online brokers and their fees) don't buy
unless you have $500 to spend. This may mean depositing every month but
only buying every other month.

3. If you are considering actively trading and timing the market (which
I think it sounds like you are), learn EVERYTHING you can first. It
sounds sexy and you hear about the guys turning $1 into $1000
overnight, but many people lose it all (professional money managers
included).

4. Happy Investing!

JBickings[at]gmail.com wrote:

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I (and I suspect most here) will offer you this; You would need 30+
stocks to properly diversify away a good chunk of individual stock risk.
If you had $250K+ in an account and said you were willing to put in the
homework, and frequent monitoring, you'd stand a chance to do as well as
a low cost index fund. I suggest you choose a broker who offers an S&P
fund with a cost of .10% or less and buy in. Once you have about $5,000,
start to buy a low cost small cap fund, then an overseas fund.

"$100-$300/mo" and "individual stock picking" are contradictory. Let's
see how others reply.
JOE

Hey!

At this time I am looking to throw 100-300 a month into investing.
FolioFn,SogoInvest.Com,BuyAndHold,ShareBuilder, etc interest me due to
their ability to do
automatic investing, fractional shares, etc. So far, it seems
SogoInvest.Com might be the better deal as while now I am just
interested in setting up my own automatic investment plan much like
FolioFn does with a make your own Mutal Fund of sorts however in the
future, with more money comming in, I might become slightly more active
as a trader instead of just buying and holding (isn't that called
Dollar
Cost Averaging?), so sogoinvest.com seems to be able to accomodate
that.

What services would you reccomend I use? Sogoinvest? FolioFn?
Sharebuilder? Buyandhold? other?

However, this are the words of a newbie, one who has only been research
for the last few days.

Now, I turn to Microphone over to the "experts"

Testing one two three......