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Lee, Last question first. Intel is going to put the functionality of
the modem on its microprocessors, so, will you pay extra for another
one? The question is whether it will work as well and that is yet
to be proven one way or another. As for your first question, I have
to admit my bias at the start. I have managed mutual funds and though
I often make fun of the managers, I think the concept and, in a few
cases, its execution, make great sense. With $5000 to invest, you
simply cannot diversify enough to buy a portfolio of stocks. It is
certainly possible to make money with a small stake, but you have to
take huge risks by betting on a single stock or two. Also, the
commissions for smaller trades, even at discount brokers, can be
a large percentage of your capital. I recommend you build your
stake up to $20-25 thousand before you try to invest on your own. You
will put the odds in your favor. In the meantime, I highly recommend
the purchase of a great no-load fund like Dodge & Cox and monthly
contributions into that account. If you still decide to go on your
own, you have to let your profits run. $75 to $100 profits are not
enough to make up for the times you are wrong. I think you have to
buy stocks that can double in five years and stick with them unless
the outlook changes or until they hit your price target. My style
is to buy what is out of favor, but you have to find a style that
makes you comfortable. Also, it makes no sense to use margin. I have
done it occasionally in the past, but I consider it gambling, not
investing. If you are right, you will make enough on your own money
to make you happy. And if you are wrong, turning a 15 percent loss
into a 30 percent plus interest loss is no fun. Good luck, MB |
