Investing for the first time

mhmmm I would have started out on a simulator, but hey... Avoid speculative assets, penny stocks are a no no. Also always keep a look on the overall markets.(SPX and Chinese Equities) because when the overall markets are up, most equities also are. Driving against the traffic doesen't work out well. As the manager of my school's investment club I always create what I call a weighted sphere, which is the factors that can influence my stock in order of importance. Just read alot about the markets, and I recommend a podcast to listen to. ALWAYS seek out information from at least 2 different sources. I was looking at IBD's market pulse last week, and it pointed to ''market in correction'' almost all 5 sessions, even if the markets went north. Thankfully I seeked info from other websites and traded sucesfully. DOn't get emotionnal about any stocks. The list goes on...

On diversification, there's two factors: first do you believe in diversification (what is your investing philosophy?), second is it worth the transaction costs to diversify given a small portfolio. Personally I have a small PA ($14K) and own 3 stocks.

Any more advice comes down to what you're interested in. Do you want to trade frequently or are you more interested in learning about businesses / investing long term? Given an interest in ER/AM I imagine the latter. If so I'd read some of the basic value investing literature for background and then sign up for a guest account on Value Investors Club and look at some of the pitches, pick one or two and investigate further.

You should be banned for referring someone to Seeking Alpha

I don't know what strategies you're into for alpha generation, but in terms of portfolio construction it depends on what you want to get out of it. If you're trying to achieve superior performance w.r.t. your total portfolio, you should put at least some weight (and preferably around ~75% depending on risk tolerance and your conviction in your picks for the other ~25%) in an index fund*. This also depends on how often you're going to be trading as the less capital you actively manage the more transaction costs will affect your returns.

If you're just trying to develop your security selection abilities then you might be better off foregoing indexes (given the lack of capital). In this case, you might try and diversify yourself more simply by just avoiding putting too much capital into any one industry. Hope this helps.

*Check this out to understand why (it's a little technical): http://www.elansguides.com/docs/L2R55.pdf

@loveoptions: I'm not knocking someone trying to give advice, but I hate people telling new traders to rely on shitty news sites instead of relying on tape reading and market awareness. Plus it's been show every site from SA to Bloomberg pays it's authors to write articles that move the markets.