HOG: We've got Evan the Stock Market Maven to teach us ordinary nubs how to make money in the Stock Market. And we've got me to make stupid ass jokes. Go ahead, Evan, teach us about the Stock Market.

EVAN: Did you just start your first job out of college? Are you new to investing and want to get started? Well if this is the case then I can help you. First I want to inform you about the misconception of investing a small amount of money. There are some people out there that think you can't invest your money unless you have $1,000,000. This is not true.

HOG: Shwew! Because to make $1 million dollars I'd have to sell my Bernie Williams Donruss Rookie Card on eBay. And man, I don't want to do that!

EVAN:  Well I wouldn't sell your Bernie Williams card either but it's not because it's worth a million dollars. It's worth about $40.

HOG: Well, it WOULD be worth that much if I could scrape this old booger off it.

EVAN:  I'm going to be honest with you. It really does help if you have more money to invest. However, most people, whether you are in Hogwildland or you have no sense of humor whatsoever, just don't have large amount of funds.

HOG: You got that right. Maybe if I spent less of my money on barbecued baby back ribs… that's it! In order to invest, I'm going to stop ordering appetizers! I will put that $7 in the stock market each week and be rich! Yes, rich!!!!!

EVAN: That is a great way to start investing and saving money at the same time. However, I don't know how you can turn down ribs. Maybe that Frappuccino or what I call a Crappuccino (not because it tastes bad but it makes me go to the bathroom) in the morning that costs $5.

Wait.... don't do that.... I need you to keep on buying Starbucks, if you read my last Stock Market article you would understand.

I believe there is this misconception that you need a lot of money to invest because most people want to quadruple their money in a matter of minutes. And this is very difficult to do (but not impossible) no matter how much money you are investing.

HOG: Wait, I can quadruple my money in minutes? Am I going to see you on TV at 2 in the morning standing in front of a Jet drinking champagne surrounded by bikini babes telling me to come to your seminar?

EVAN: Yes.

Another misconception when investing with smaller amounts is that just because you have, for example $1000, doesn't mean you should invest in a $5.00 stock because you can buy more shares.

Historically a stock that is, at let's say, $5.00 (Sirius Satellite radio) and you buy $1000 worth of this company you will have 200 shares. Now you are excited because if the stock goes up $1.00 you have a gain of $200. Woo Hoo.

However, there is usually a reason the stock is $5.00.

For example SIRI has never profited a dollar and by the time you get that gain you could have purchased a stock that increases on average .30 a day and made the gain you wanted. If you are confused then let me sum it up for you.

HOG: Yes, you've turned my head into the washing machine spin cycle.

EVAN: It's not that difficult to understand. I used small numbers so your small brain can comprehend how to do math.

If you buy an apple for $1 and you sell it for $2 in a week -- you made a dollar. However, if you buy an orange for $1 and you sell it for $2 in one day then the orange is a better buy.

If you have a small amount of money to invest don't buy cheaper stocks because you can have more shares... invest in a company that has large growth potential and actually makes money.

HOG: Okay, I get it. Everybody likes to jump on the bandwagon of the hot new stock. But you're saying to invest in companies that have proven they can actually turn a profit.

EVAN: Exactly. Depending on your age and risk factor you can still get away with speculating and jumping on the bandwagon of a new stock, but this isn't for everybody. In the late 1990's, people were investing in companies that never made any money and they were speculating on the growth of the company which one day will make money.

If everybody is doing this, then the stock will be oversold and will be soon doomed to fall.

In order to avoid large losses, invest in companies that have proven track records. Google is a good example of a technology company that could have been doomed. When Google stock first came out (IPO) investors were placing their money in Google even though they never reported income. However, now every time they release earnings they make more and more money.

HOG: So if this was baseball: don't go crazy over the hot prospects in the minor leagues. Go with the established Major League veterans who are still in their prime.

EVAN: Exactly. You could go with the hot prospects in the minors and take that risk. However, if you go with proven talent, the chances of that player being good is high. This player -- just like a good stock -- will be consistent.

HOG: And if this was home goods: don't go buying candles with funky new scents just because they are new. Go with a popular candle with a luxurious vanilla scent with a hint of honey so it can fill your home with love and comfort. Oh, sorry. My girlfriend has been brainwashing me.

EVAN: Ummm.......Usually your analogies are good but you have definitely lost me.

I've heard a lot of financial advisers give advice to "entry level investors" saying they should go with a mutual fund with no fees because with a mutual fund your money will be diversified.

HOG: Yeah, I heard this, too.

EVAN: In my opinion, yes your money will be diversified, so your risk will be lowered but if you are a true "entry level investor" don't waste your time with mutual funds. Invest the money yourself and do not diversify your money.

HOG: WHOA! CONTROVERSY!!! Listen, I've always been told you put your money in the entire stock market. Buy little pieces of every big company. So as the overall economy improves, your assets go up. Now you're telling me I'm an idiot?!

EVAN: No, not an idiot. Just a moron. Yes, you should diversify your money. This will minimize your risk. But when you have minimal funds to invest with (remember we are talking about "entry level investors") if you get what the average mutual fund is paying, which is about 7% a year -- then your $1000 will be a whopping $1070. WOW!!!!! If you are an entry level investor right out of college you can afford to take a bigger risk than this.

Invest in one company and get a higher return yourself. If you are just starting out investing you probably don't understand what mutual fund investing is anyway. If you invest your money in one company, the potential of getting a better return is much higher.

For example if you owned Apple computer last year, they had a return of 140% and Google had a 300% return. This is more risky but the risk/return factor is in your favor.

HOG:  So you really believe in taking calculated risks. I guess that makes sense. It's like having sex with a random hot bim, but 1st doing some research to make sure she is not insane or a member of your extended family.

EVAN: You should always do your homework no matter what or whom you are dealing with.

HOG: So without Risk, there is no Reward... Cool. But how do we know which Risk to take? I guess that is for a future lesson from Evan the Stock Market Maven! All hail The Emperor of Investing, The King of Wall Street, The God of Finance... Evan the Stock Market Maven!!!!!!!

EVAN: Okay, that's enough.
 

To speak with Evan, email him directly: evan1002@gmail.com