Is this a good stock to invest in?

Question

I am new to stocks and my grandpa who is big into it wants me to get involved and he thinks this would be a good investment to start out with:

First Calgary Petroleums - http://www.fcpl.ca/

what do you guys think?

Answer 1

Hope the following doesn't sound condescending.

Before you answer the question whether First Calgary Petroleum is a good stock to invest in you should ask yourself why you believe that you can make money by picking individual stocks.

There are several reasons not to attempt to pick individual stocks and invest in index funds or exchange-traded funds (ETFs) instead:

1. In the long term, the average investor will have an average before-costs performance equal to the market average. Therefore the average investor will benefit more from reducing investment costs than from trying to beat the average.

2. The efficient market hypothesis, which postulates that equilibrium market prices fully reflect all available information. It is widely interpreted as suggesting that it is impossible to systematically "beat the market" through active management, although this is not a correct interpretation of the hypothesis in its weak form. Stronger forms of the hypothesis are extremely controversial, and there is some debatable evidence against it in its weak form too.

3. The principal-agent problem: an investor (the principal) who allocates money to a portfolio manager (the agent) must properly give incentives to the manager to run the portfolio in accordance with the investor's risk/return appetite, and must monitor the manager's performance.

4. The capital asset pricing model (CAPM) and related portfolio separation theorems, which imply that, in equilibrium, all investors will hold a mixture of the market portfolio and a riskless asset. That is, under suitable conditions, a fund indexed to "the market" is the only fund investors need.

Only if you have a strong reason to believe that you can outperform the market on a risk-adjusted, after-tax basis should you engage in stock picking. (Or if you enjoy the thrill of gambling.)

Answer 2

if you are new to stocks then the answer is a big NO.  This is a very speculative energy company that may or may not be around tomorrow.  All this is my opinion.  Your uncle is an idiot for recommending this to you.  I would recommend that you look at mutual funds or ETF's as a beginning investor.  Buying individual stocks carries more risk than buying a fund and this particular stock carries a lot more risk than the usual stock.  Again this is not a good investment.