Bonafide:I'm 15, and just starting to dip my toes in the realm of investing with only a little sum of $500. I've read a few books such as Jason Kelly's Neatest Little Guide to Stock Market Investing, and in the process of reading Benjamin Graham's The Intelligent Investor. I also have a collection of S&P reports next to my computer... good to start early, no? :-)
I have a few questions though, because I'm a minor (15), am I only eligible for a custodial account, or can I sign up for a individual account? If the former, I guess I must go with TradeKing, the only best alternative ($4.95). One more, knowing that most investors obtain a greater return through small-cap value investing (and are better off with small-cap value investing), I just can't seem to find much companies that are promising in my eye that are value, I've find tempting small-cap growth companies though such as Netgear (NTGR), Quicksilver (ZQK), Amerigon (ARGN) and the like - they all have good financial records, and a few large-caps such as SanDisk (SNDK), LM Ericsson (ERIC), DELL (DELL; increasing revenue, introduction to the public via Walmart and Sam's Club), and a few others. Am I missing something? I must be turning a blind eye to small-cap value stocks...
Anyway, I hope to start investing soon and make a tidy sum of money through it over the years. Advice & tips are welcomed!
You're reading some good books; let me suggest reading One Up on Wall Street or Beating the Street by Peter Lynch.
You could have a conversation with a parent/guardian about setting up an account for you. It would be their account, but if they're willing to give you access to make purchases, great. They'd be liable for the taxes! I'd also suggest you consider an IRA if you have earned income--I'd really encourage a Roth IRA--please give serious consideration to this suggestion.
It's cliched, I know, but the best tip you'll ever get is "don't listen to tips." Tips belong in restaurants; knowledge, patience and experience are needed in investing--a little bit of luck now and again helps a lot too!!
Small cap companies outperform that market overall--they tend to cycle like value stocks. If you divide the universe of companies into large, mid and small cap, large cap tends to have the lowest risk and return; small cap the highest; however, and this point is important: mid cap companies--as a group--tend to have a risk profile higher but close to large cap and return behavior lower but closer to small cap. IMHO, picking from among mid cap companies, at your age, is the place to be.
I'd also encourage you to consider using sales as criterion rather than market capitalization--it's less volatile, and, IMHO, a lot more meaningful. The group you want is probably companies from about $750 million to $10 billion.
Check out the website I posted above. If you find other good websites, let us all know.
Good luck!
Slow 'n Steady!
www.manifestinvesting.com