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I bought my first stocks yesterday. Finally getting into some of this Wall Street action. Honestly, I’ve been playing those online stock market games for a while and am excited to finally be in. My purchases include the following:
Cryptologic, Inc. (CRYP)
Drew Industries (DW)
Fuel Tech NV (FTEK)
First Marblehead (FMD)
Yamana Gold Inc. (AUY)
My total purchase was $1,000 and I am definitely long-term on these picks.
I will continue to add more to my holdings as I bring in that paycheck from my new job.
Speaking of which, I will be working at a corporate consulting firm in Edison, NJ for the summer.
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With $1000 you should start with an index fund. It will track the market and the expense ratio is low. It seems like you want to pick your own stocks though. That’s good and I hope you do your research, but you should remember one thing. Always think about your costs!
For instance your total purchase was $1000 for five different stocks. I could comment on the allocation if you give the number of shares you bought.
I’ll make some assumptions: I’m assuming you bought 5 to 15 shares each with DW being the least amount because of the share price. I would guess you bought 5 shares of this. Assuming you go with a cheap broker we’ll say a $5 commission. DW would have to increase roughly 14% before you break even just on the buy commission. Calculating this with a round trip commission, it would need to increase a little over 28% before you break-even! That’s a huge gain before you get back to 0. Taking into the fact that the market’s long run average return is around 8-10%, this may take a couple of years. It’s had a nice run-up so far, but it might pullback.
My last point: total commission costs. I’m assuming your $1000 includes commission costs and that this was $5 per order. This totals to $25 which translates into a 2.5% commission. This is a huge commission percentage. Average investors with cheap brokers can definitely get their commission costs to much under 0.5%
It might not look like a lot, but run some queries for the long term and this 2% difference adds up (also check out compounding)
Just my two cents
Hm I never really looked at it that way. I suppose I should accumalate more cash before I buy my shares so as to keep my commission percentage down. I was thinking about investing in an index fund, but I want to beat the market not just keep up with it. Nevertheless, I will be investing in an index fund for the purposes of my Roth IRA which I will open up this summer. The stocks I’ve picked are ones I feel are highly undervalued and have at least average safety. But I do understand the fact that much of those potential gains are going to go towards breaking even at this point. Btw, here are the number of shares I own for reach stock (My broker, TradeKing charges $4.95 a trade so my total was around $1030.)
CRYP 7 shares $197.73
DW 5 shares $187.80
FMD 5 shares $235.45
FTEK 11 shares $197.45
AUY 18 shares $211.95
Hey Rohail … nice website bro… keep it up.