Expert: Dr. Joseph de Beauchamp - 7/12/2005

Question
Dear Mr. Deauchamp,

I just recently graduated collge with a focus in bot accounting and finance. So I am familiar with the investment universe. I just recently opened a Scottrade account.

I stared with about $3000 and bought 15 shares of TYC @ $29.77, 15 shares of JBX @ $38.37,20 shares of BUD @ $46.23, and 30 shares of HUBG @ $25.77. I also have a cash balance of  $4200. One question that I have "is my portfolio too small"? Meaning should I have a larger steak in some of these companies?

With the $4200 cash position I plan to purchase 2 companies in particular that are about to IPO. So Im thinking with this money I shall have a nice share in two companies. (Just divulging some future plans)

I should also note that I am not trading options because they are very complicated and can get expensive. I also am not trading on margin. When will I know when I am ready to trade on margin?

I feel that my college education has helped me in understanding the basics of investing. I truly enjoy this stuff and I feel I have the potential to make money I just need some guidance. Am I on the right track? Am I pursuing a strategy that can make me money or am I wasting my money which could be better spent else where?

Thanks for you time,

Steve Rodriguez

Answer
Steve,

I will give a look into this. You will not like what you hear from me.

1. I never recommend anyone going into stocks without at least 10 different stocks.
2. Min. 100 shares per position or a round lot
3. Never ever do options or commodities, even if you are Bill Gates.
4. Long term hold on these assets for 10 year business cycle.
5. Sell at market when you make 20% positive return
6. Sell on any stocks falling more than 10% and right away.

Seems to me that I would only recommend a good internationl mutual fund for you. Sorry, but in 32 years, I never recommended stocks for less than this. Remember that this is free advise, and your broker that you pay commissions to, would probably give you entirely different suggestions.

Dr. Joseph de Beauchamp