Stock Markets Exposed

Investing Advice?

I am 15 years old and have made $2,500 off stock trading in my first month of trading. I trade new IPO's such as China Digital TV and Longtop Financial. I began on the 8th with initial capital of $3,200 and now have $5,700 but I am not sure whether only to play with the profit I have made or continue risking my intial capital by keeping investing with it. I really dont have much to lose because I am only 15. I know I am bound to have a bad IPO and lose 20%. What do you think?

Public Comments

1. Congrats times two (at least), especially at your age. Always save at least a portion of your reserve when you're ahead plus a percentage of your profits. Lower your risk with each successful trade and remember, diversify x3. Good luck.
2. The really big money mutual fund managers are treated like supermen if they can get 20% a year. If they make 30% in a year they get their own TV shows. These heros get paid mega-bucks for managing a stock portfolio that gets 20-30%. Okay, and you made like >60% in your first month! That was pure beginner's luck. You are correct in thinking that it is not sustainable. So, what should you do? Keep investing. Don't put all your eggs in one basket. Be diversified, and spread your risk. By the time you are 30 years old you will be a millionaire. I hope they give you your own TV show soon.
3. Firstly - wow, at 15 and scoring that big is great. Secondly - Chinatown is red-hot and valuations are above the roof and climbing, this is why the gains are so sizable. History shows though that this is not sustainable over a long period and usually results with a burst of the speculative bubble. Since you can already congratulate yourslef with something most people cannot even in years of investing - take it easy, learn about diversifying and valuation. Be smart, do not get cocky.
4. Absolutely, you need to do some selling. I'm not wedded to the idea that you need to get your principle or basis back out immediately, but you should sell some piece of your big winners. I think it is a BIG mistake to think that because you are young, you can or should put all of your money into risky investments. Instead, you MUST put some of your money into high quality steady-eddie high dividend paying stocks, and reinvest the dividends into more shares. Examples: Pepsico (PEP), Coke (KO), Altria (MO), Chevron (CVX), Bank of America (BAC), Proctor and Gamble (PG) and so on. Some of these may be overpriced now, so maybe wait for dips and don't invest all at once. I don't think what you are doing is a bad idea & I think your are certainly correct to expect a loss. The key thing is NOT to make an abnormally big bet on one stock & keep selling when the gains are big. Keep a sizable cash reserve & don't ever use margin cash.