Best Online Broker for Penny Stocks and the Small Value Investor
This is really the third in the series of Investing 101, the second of which discussed setting up a Small Investor Portfolio. But the title would have been too long if I left all that in. As value investors we are not just interested in value of our stocks but the process in which we [...]
The Chroma Investing Small Investor Portfolio
This is really the second in the series of Investing 101 that I previously started.
It is my intention to start an investing account with just $2000. The reason for this is that it is an amount of money that one could save in a year with less than $200/month. I will add $200/month to the account to mirror what a small investor might be able to do. $2000 is also an amount that you may have on hand, saved from not buying a Starbucks latte every day for a couple of years. O.k., lets not get that extreme. Like all the investments detailed on this website, all trades will be real money, so all gains or losses will be actual and reported on this blog. I will call this the Chroma Investing Small Investor Portfolio.
An account of this size will allow you to hold 3 or 4 equity positions and thus to have a focused value oriented portfolio. Starting with a small amount will also force a certain amount of discipline in buying. Knowing in advance that you will initially only be able to hold 3-4 positions will focus our attention on the quality of the investments to make sure that we are making only the best investment decisions.
The investing philosophy will be straight forward: value investing with an emphasis on NCAV and other deeply discounted asset plays, special situation investments, or other empirically supported value investing approaches, all with an emphasis on maintaining a margin of safety and keeping an eye on understanding the investment risks inherent to each company. I will concentrate on small and micro cap companies, where the smallness of our portfolio is actually an advantage over big money investors. I will look for the best value, and not shy away from Penny Stocks, if that is where the value leads. My intention is to avoid leverage, and any investment involving margins, including options and futures. It is possible in the future that I will develop a value approach that looks at investing against the market or an individual company if I can satisfy myself that such a strategy can be made in a beneficial risk/reward scenario.
I do not intend to invest in mutual funds, ETF’s or bonds. Nor will their be any speculation on commodities, currency or other other bets outside of my ken.
Tomorrow I will begin the search for the best online broker for this account.
Linktone (LTON) NCAV Stock – Buy
Yesterday I bought 1000 shares of Linktone (LTON) for $1.69/share and $4.95 commission for a total investment of $1694.95. inktone is, according to their latest 6k, ” one of the leading providers of wireless interactive entertainment services to consumers in China. Linktone provides a diverse portfolio of services to wireless consumers and corporate customers, with a particular focus on media, entertainment and communications. These services are promoted through the Company’s strong distribution network, integrated service platform and multiple marketing sales channels, as well as through the networks of the mobile operators in China. Through in-house development and alliances with international and local branded content partners, the Company develops, aggregates, and distributes innovative and engaging products to maximize the breadth, quality and diversity of its offerings.”
Value Investing Congress Discount Ends
Value Investing Congress is having it’s West Coast version the first week in May, 2010. There are a variety of discounts available that all amount to the same thing, but here is the thing. The discount up to $1750 ends tomorrow night at Midnight.
Qiao Xing Universal Telephone, Inc. (XING) Net Net Stock – Buy
On Friday I purchased 1500 shares of Qiao Xing Universal Telephone, Inc (XING) at $1.91/share with my TradeKing account, so my brokerage fee was $4.95. Despite the name, Qiao is not a telephone company any more. They have recently focused their business to mining operations and are divesting themselves of their phone subsidiaries.
Beware of Brokerage Costs
The more money you spend earning your money, the less you keep. This includes premium services, taxes, transaction costs, brokerage fees. Anything that keeps your dollars from compounding in the future. In general this concept is pretty easy to grasp but in particular small money and beginning investors need to know that there is a difference between paying $10/trade and $5/trade.
Small Money Investors – Don’t Invest like Warren Buffett
When I say don’t invest like Warren Buffett, I mean don’t invest like Buffett does now. We can look at this in two parts.
What not to believe for Beginning Investors
A lot of crap has become accepted in financial and academic circles. Some ideas also end up in investing circles and they are regularly recycled like the theory is fact. Sometimes the has already been discredited or is logically foolish, but they get pushed on the unsuspecting anyway. Remember if an idea seems illogical, it probably is. Let’s look at a couple these ideas and how they can help us anyway.
Investing Conference for Beginning Investors – AAII
Part of this blog’s mission is to help beginning investors gather the essential information so that you can make informed investment decisions on your own.
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