We’re a few days into the eFIPO challenge, and we are all surviving alright so far, right? Actually, I’m not doing to badly. As of today (Tuesday night) I’m fourth, which given my strategy, or lack thereof, is rather impressive.

Thus far I’m just lazy. Not once have I looked over any ratios, financial statements, quarterly reports or news statements for any of the companies that I’ve invested in. I’ve taken a peek at a few charts (I’m a very visual person) and sort of taken the roulette strategy - if I see a lot of decline, I assume that some increases are coming - kind of like the red/black thing.

So where does that leave me? I just figure I’m the average consumer, so I buy stocks that I am familiar with for companies that I am purchase goods from. Google?Got it. Apple? I’m saving for an ipod nano and nike sports kit. Whole Foods? Yup, I like to buy organic and local. I would be buying LVMH (yes, that’s Louis Vuitton Moet Hennessy) if we could buy in non-US markets (what girl doesn’t love a Louis Vuitton Speedy? Such a classic). And Merck? An anti-cancer vaccine with 100% effectiveness for a disease that infects millions of thousands of women, not just in the US but globally? And is getting national support for mandated vaccination even though it costs $300 and only fractions of that to produce? Vaccines are great - microbes don’t develop resistance to them like they do antibiotics, and governments love them since they almost always come out on top in cost-effectiveness studies.  What’s not to love?

I’m curious, what’s your strategy?

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I know that this story is already losing its steam, but I think I will put in my two cents before the NASDAQ balances out. The stock market fell a good amount and everyone is freaking out about their stock holdings. What should you do if you own stock? Absolutely nothing. The market’s been going up steadily since September 17, 2001 and it was time for some self-regulation. Think of the stock market hiccup as a great time to purchase some stock from some good companies. Just look at it as a huge market SALE. Everything must go! Investors start your engines!

Now if you are too much of a little girly man to purchase in time of such volatility, I would highly recommend some spring cleaning in your personal financial life. Think about some issues you’ve been having and correct them. Are you in some debt that could be cleared up? Any repairs around the house you’ve been postponing? This is a great time to fix up any loose ends with the extra money you aren’t investing.

I am currently saving extra money for my cruise on Thursday, which is another type of investment you should think about. If you are planning a trip, consider saving for it before it’s too late. Start using your online savings account again and automatically draft monthly amounts to your savings. You’ll get some interest and you don’t have to worry about coming up with the money after the trip’s bill comes in the mail. Doesn’t it suck when you receive a huge bill from the bar and you don’t remember what it’s for?

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Remember to join the eFIPO Stock Game (Click Here to Join the Game). The game started today and you can buy free  stock to win some great prizes at the end of the quarter. Remember to tell your friends and family! More players, higher the stakes! Register today and start trading like a stock trading master. IT’S FREE REMEMBER?!?!

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Have you figured what markets you would like to invest in? What’s in your portfolio? Did you decide to stick with mutual & index funds or are you educated investor and decided to go with individual stocks? Sometimes taking all routes will accomplish your investment goals. I like the advantages of having a mutual fund for diversification purposes and it will be used as a safety net. The mutual funds inside my mutual fund portfolio are still pretty aggressive, but owning individual stocks are susceptible to a lot more volatility.

If you own an individual stock portfolio, what market segments do you want to invest in? I like to stick to the markets I know, but with my recent stock purchases I am venturing in uncharted waters. Does it mean that I am going in blindly? I don’t think I am. I looked at past returns of the companies, their prospectus for their future and where I think the markets are heading. Most of my stock portfolio was heavily weighted on American consumers. And now I am invested in a few Canadian based stocks and companies that have global consumers.

If you are a young (18-35) financially EDUCATED investor, I would stick to 60% individual stock portfolio and a 40% mutual fund portfolio. You may be asking yourself, Jeremie why aren’t you following your own advice? Well, when I first started out investing in the stock market, I was financially uneducated in the stock market. I took a lot of time educating myself on investing and now I only invest in single assets. The stocks you own within in your portfolio are totally up to you, but my portfolio consists of 90% in growth stocks and 10% in dividend paying stocks. I stick to large cap stocks in my stock portfolio, because I don’t know enough about the small cap market to invest in it correctly.

Whatever investment direction you decide to go with, always remember investing early will usually promise solid long term returns. If you want to test your stock smarts, remember eFIPO.com stock market game. It will be going on very soon and comments are welcome! You can win some awesome prizes and signing up is free!

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Catchy title right? This discussion will show you why and how small cap funds can really make a difference for the young investor. First thing, small caps can make you a ton of money if you look at their long term potential, but so do single stock allocation portfolios; which you could try your luck out with eFIPO.com Stock Investment Game. When you think of small cap funds, what do you think of? Really small companies that either makes it big or crashes and burns? Well here is a good definition brought to you by Investopedia.

A small cap fund: refers to stocks with a relatively small market capitalization. The definition of small cap can vary among brokerages, but generally it is a company with a market capitalization of between $300 million and $2 billion. One of the biggest advantages of investing in small-cap stocks is the opportunity to beat institutional investors. Because mutual funds have restrictions that limit them from buying large portions of any one issuer’s outstanding shares, some mutual funds would not be able to give the small cap a meaningful position in the fund. To overcome these limitations, the fund would usually have to file with the SEC, which means tipping its hand and inflating the previously attractive price.

That is a much more precise definition that has some key parts that should jump up at the young investor. The return value of most small cap funds is higher than their big brother large cap funds. Small caps do have a higher risk of doing poorly in a down economy, but with most active mutual funds the risks are usually lessened. The reason why I think investing in a small cap mutual funds is so beneficial to the young investor, is you could live through the hard times, and gain with the good times.

For instance, if you invested $100 in a small cap mutual fund and a $100 dollars in a large cap fund in 1985, you would have almost two times more in your small cap fund portfolio (according to Kenneth French).

Here is another example brought to you by Ben Stein.

“If I had invested $1,500 in the S&P 500 index stocks starting in 1958 and reinvested dividends up until the end of 2004, I would have roughly $216,000. Not bad at all, and how I wish I had done it.

But if I had narrowed my search and bought only the large capitalization value stocks, which would have been the top half of all New York Stock Exchange (NYSE) stocks in capitalization, and the highest third of those in terms of the ratio of book value to market price, my $1,500 would have grown to an astounding $711,000.

But the really stunning piece of news is that if I had put my bar mitzvah money into small cap, high value stocks, I would have gotten a ride into outer space. If, way back in 1958, I had taken the stocks in the bottom half of the NYSE in terms of capitalization and purchased the third of those with the highest ratio of book to market value with the $1,500, today I would be sitting on around $3,567,000.”

I highly recommend finding an online broker that lets you start up an Automatic Savings Plan and invest it in small cap funds when you are young. Yes, I do believe in some diversification, but remember you are a long term investor so don�t diversify too much.

I only recommend individual stock investing when you have accumulated enough wealth in a mutual fund, and want to educate yourself on purchasing single stock allocation portfolios. I like the diversification my mutual fund gives me, but I doubt I will put any more money into it. I have educated myself on the criteria of stock selection, and believe that I can give myself a higher return than a mutual fund. Again, this is not for everybody, but a mutual fund should be.

Would you like to try your luck on purchasing single stock assets? Well eFIPO.com is going to be having an investment game starting in January. Check out it out!

If you want some good financial advice check out the quiz I created to help you narrow down your search for a proper investment portfolio.

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I am currently reading about investing in options. The first book I read, even though it was marked “for beginners,” was extremely hard to understand. The writing style isn’t wonderful and the author really doesn’t explain the key words to option trading. After snooping around the internet, I found some great resources that educate the real beginners to online option trading.

Investopedia has a great novice course that explains what option trading really means. When I first started reading about options, I thought it was highly speculative. But after some further investigation there is some sense to the madness they call option trading. There are two types of options that you can either buy or sell. I will only talk about one kind because I don’t fully understand the other yet. A call option is when you have the right, but with no commitment to purchase a stock at a certain strike price.

Now how can this be a rewarding opportunity for young people in their investment nest eggs? High returns with less money being involved. Here is a quick example (I will be covering more about this subject later on).

Let’s just say you have the option to buy a stock like Circuit City at a strike price of $27.50. Currently Circuit City is selling at 24.18. The break-even point for this option would be 28.65 (27.50 + the cost of the premium; which will be $1.15 for this example). But all you have to invest is $115 dollars “A stock option contract is the option to buy 100 shares; that’s why you must multiply the contract by 100 to get the total price.”

You’ve just gained nearly 300% on a stock deal! Pretty nice eh? BUT! Huge BUT.. The first thing I learned about options is you do not want to invest any money you are willing to completely lose. Educating yourself as much as possible before purchasing options will drastically help your chances for turning a profit.

The investment game that eFIPO.com will be introducing in January will allow option trading; which will definitely help you learn about them. So you can buy all the options you want with no risk! When I start getting into buying options in May, I will have enough knowledge to limit my risk. Like I said before registering for the game will be free and extremely rewarding (cash prizes!).

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Want FREE MONEY!?! I will be adding some big time changes by the New Year, January 1^st, 2007. The first thing I will be introducing is the making money in stock program. This will be a 100% free to anyone that participates and receives real money (gift cards) when you win! You will have to sign up with MarketWatch and join the game that I create around March 1^st. At the end of each quarter (other than the last quarter) the person with the highest amount of money in their portfolio will receive a $25 gift card. The winner of the last quarter will receive a $100 dollar gift card!!! The only way I will be able to honor these programs is if we have enough people signing up to join the investment group; WHICH IS FREE!

I will also be introducing a podcast which will deal with financial and political issues. I will be asking people to talk about finances and debating on politics and other issues surrounding the world and this country. I think this will be a lot of fun, and we will get to hear the opinions of people all around N. America. When this add-on ends up happening, you can send me an email to be invited to participate in one of the podcasts.

The last thing I will be adding is a totally up to you! I need your comments and support on this one. I will be giving away a book to the winner. The winner will receive one of my favorite books “The Automatic Millionaire : A Powerful One-Step Plan to Live and Finish Rich.” The person that gives me the best idea of an add-on to eFIPO will receive this free book. You can either leave a comment under this post (and a few others) or email me.

All of these add-ons require a lot of reader participation. I need to hear what you think about the add-ons and what to know whether or not you feel like these add-ons will be worth it or not. I will update people on a weekly basis (probably) on the progress towards the inclusion of these programs.

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