Financial Remix: An individual stock portfolio is not for everyone



With all the hype and chatter of Facebook’s Initial Public Offering (IPO) and Mark Zuckerberg’s intent to raise $5 billion — one of the larger IPOs in history — Facebook’s financials have already been released, so the questions are now looming across all the airways. What will be the offering price — overpriced hype or a good value? What are the future global plans and growth for the company — privacy policies and web security?

Once the company goes public, at some point in the next few months it will be available to all of its 800 million users for trading on the public stock exchange. So with the mass popularity of Facebook, could this mean a grand slam for Junior’s college funding, or will the history of social media stocks prove, once again, to be a flavorless clique? Less we forget, LinkedIn and Groupon are both down 20 percent since their initial public offering. Zynga Inc. has finally pushed pass the $12 mark from its $11.50 price in the beginning.

With this, I thought it was the perfect time for an article on basic investing in the market. Over the past 100 years, the stock market has outperformed every other investment. Over the long haul, most investors will tell you that several small gains are much better than having one grand slam.

Whether bearish or bullish, investing comes with significant risk and volatility. But jumping head first into the deep end is not necessary. Based on your comfort level and investable dollars, dangling your feet in the shallow waters with just a few dollars each month to invest is a great way to get a feel for individual stocks.

It is wise to take full advantage of the wealth of information available right at your fingertips. From books written by professional investors to simply reading financial articles every day, educate yourself and your children on the basics of investing and the terminology. You will quickly come to find that the abundance of information and opinions are quite overwhelming. You will grow to like particular websites and business journals that offer reliable content.

Leaving your personal investing to the professionals (brokers and financial planners), may be a good idea for those of you with limited time for ongoing research or simply don’t have the desire to learn a new trade (beyond the recommended due diligence).

Below are a few musts prior to investing:

1. Learn the lingo: Read financial news tickers, the major stock indices (NASDAQ, NYSE, S&P 500, etc.), market trends and types of trade orders.

2. Start from the cornerstones that you are either an owner (company stock and equities) or lender (debt or bonds).

3. Understand your tolerance for risk: conservative, moderately conservative, moderate, moderately aggressive, or aggressive. Also, what kind of investor do you plan to be: active (day trader) or passive (buy and hold).

4. Develop the goal for investing and a strategy for picking stocks (one example, invest in companies that you patronize frequently or stable companies with longevity).

5. Research your stock picks, company organization, annual reports, news headlines and websites frequently. Organization restructures, mergers, acquisitions, IPOs are common occurrences in business.

6. Diversify across the industry sectors (telecommunications, financials, utilities, transportation, etc.). If you ever watch Mad Money on CNBC, Jim Kramer has a segment called “Am I diversified.” Callers will give Kramer their top five or so stocks in their portfolios, and Kramer will hopefully offer the caller a “Hallelujah — nicely diversified.”

If you decide to go at it alone, here are the most common sites that offer very easy online trading. Check opening and minimum balances: TD Ameritrade ($9.99 per trade), ING Direct Investing ($4 per trade), E*Trade ($9.99 per trade), Scottrade ($7 per trade), and Zecco ($4.95 per trade). Good luck!


Freelance writer, financial consultant, entrepreneur and mom, Tamela Saulsberry brings a combined 16 years of experience in business, finance, sales and coaching. She is delighted to receive your questions and feedback. She can be contacted at or 612-269-2341.