Expert: Paul Henneman - 3/13/2005

Question
Hi Paul

I'm going to start invest in a stocks, but still not have an open investing account. Could You give me an advice which brokerage company is the most customer friendly and cost afficient (not expensive), but not necesserly online broker.
I've been already doing some searching and was thinking about Edward Jones because of their long term approche which I belive is right, but unfortunately was to expensive for me.
By the way I would be really appreciate if you would give me some investing tips (I've already red Robert G.Hagstrom's"Warren Buffet Way" and "The Essential Buffet" as well as Arthur Levitt's "Take on the street"), but still need to learn a lot and any suggestion or advice will be really helpful.
The best regards
Wojtek

Answer
Thank you for your question!
Unfotunately I am not really able to recommend any brokerage but online ones. I find that brokerage houses in general charge too much and give too little. Their research is almost always sub par and not worth the fees associated with trading with them. I have to admit that I am not very familiar with Edward Jones, and am therefore lumping them in with my general opinion.
As an alternative, I strongly recommend an online service such as www.FOLIOfn.com  They offer a service where you can set up and trade a portfolio of up to 50 stocks for only $19.95 per month. That is a very low cost, you can buy and sell as much as you like for that cost. I find it highly effective.
The books you have read are a great start. I would also recommend William O'Neil as an author worthy of your attention. He founded Investors Business Daily, a very well established research firm. Any of his books will do, they are all very similar.
I also have several other suggestions. Pick up a copy of Barron's "Dictionary of Finance and Investment Terms". It is a great resource to have handy to be sure you understand all elements of every term or data point you come across in your research. I use mine almost every day.
Also, I realize that it will sound simple at first, "Investing for Dummies". The advantage of this book is its discussion of all sorts of investments. This is an important foundation, to fully realize what type of investor you are, and pick the types of investments you find most attractive based on cost, risk, and time horizon. A general start such as this will give you a great foundation of the various schools of thought on how to research as well, and you can do further, more specific research on what you find most attractive.
You are off to a great start. Successful investing takes research, patience, and time. It should be a lifetime hobby. Some years will be good, others bad. Learn from your mistakes.  A conservative portfolio should that about matches overall market performance should on average double every five years. The more you learn the better you can do. But look for strong, consistent performance. Those that are greedy, investing in all very risky micro cap stocks, only a few stocks at a time, have only short term success. Long term failure is almost certain. If it is too good to be true, it is. We concentrate on long term, consistent out performance of the market. Time, patience, and real research make this very possible, and over time small investments can really grow.

I hope this helps! Please do not hesitate to follow up with me if I can be of any additional assitance,

Sincerely,
Paul Henneman
President
ValuEngine, Inc.
www.ValuEngine.com
www.VEInstitutional.com
www.VEReports.comk
(800) 381-5576