Yes, you are.
Kids are always buying into “get rich quick” schemes. Buying a stock because it has a low price tag but a big name is certainly one. You can win, you can lose; but mostly you lose. Citi going to $50 is not likely gonna happen. Neither is AIG, Ford, GM, WaMu, or others (WaMu is bankrupt since October, but some still think it can come back). Will one of them hit the ceiling? Maybe. So which one should you throw $500 at? You can’t know.
If it’s “one and done” then why not, go ahead and throw away your money. But these things usually turn into a constant search for the “Deal”. You end up throwing good money after bad, and there’s nothing to be gained except a $3000 capital loss deduction on your Form 1040.
You are missing out on investment opportunities too. Let’s say you hit the jackpot and C goes to $50/sh in 30 years. You’ve made 5000% profit in 30 years, or 32-33% per year (CAGR). Very nice. But how certain is that investment? Close to zero.
Now invest wisely. Choose a solid company with a good balance sheet (not that I’d trust anyone’s balance sheet these days). Say you end up with a 4% dividend and a long term growth rate of 6-8%. This is a much more likely event to occur, and it is also pretty nice. Picking this kind of company is not a 100% thing either, which is why it is important to diversify (spread the risk; most companies will perform this way and only a few will fail). But this $500 investment ADDS value to your holdings, SJS’s (while very popular for its instant gratification qualities) DETRACTS value. Your $500 is a write-off at the time of purchase.