For someone getting started in buying stocks, how do you determine how many shares to purchase?

The more purchases you make, the more brokerage commissions you pay. Its not the number of shares, its the dollar amount you have in each that you should consider.
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If you are just starting out and are not a financial expert, it is best to use no-load low expense mutual funds such as fund at Vanguard or Fidelity. A properly balanced portfolio should have at least 10 stocks spread out over many different industries.

Sources:
http://www.vanguard.com/VGApp/hnw/planningeducation
http://www.fool.com/school.htm
http://sec.gov/investor/pubs/assetallocation.htm
http://www.diehards.org/readsites.htm
http://finance.yahoo.com/education/begin_investing
http://finance.yahoo.com/funds/basics

Asset Allocation Calculators
(Determining how much to put in stocks and how much into bonds and money markets is a personal decision depending on your financial status. These Asset Allocation questionaires give you a rough idea how to do this. I like Vanguard best, but try some of the other sites as well.)
https://personal.vanguard.com/VGApp/hnw/FundsInvQuestionnaire?cbdInitTransUrl=https%3A//flagship.vanguard.com/VGApp/hnw/planningeducation/education
https://ais2.tiaa-cref.org/cgi-bin/WebObjects.exe/DTAssetAlcEval
http://www.ifa.com/SurveyNET/index.aspx

Web forum: http://www.diehards.org/
(Many investment web forums are overrun by scam artists. This one seems the most legitimate site.)
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You should sit down with someone licensed to sell securities by the NASD to go over what's best for you. They'll determine your risk tolerance.

Since I am licensed, I can tell you I wouldn't recommend investing in individual companies. You want to be as diversified as possible to avoid putting your eggs in too few baskets (think about Enron).

Going into a Roth is an excellent move.
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The brokerage fee's will add up. It might cost you $80 to trade eatch stock. Witch mean it will have to go up over 8% just for you to break even.

I suggest you save some money and learn to trade in the mean time. Here is a good site that can teach you a lot about trading.
References :
http://www.stocks-simplified.com

One thing to consider is the commissions charged by your brokerages. I try to stay below 2% in commissions. I invest a minimum of $350 a pop with a $7 commission (2%). You may want to consider a good ETF if you plan to hold a while.
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It's usually a compromise between diversification and buying shares economically.. Possibly buying $1000 lots is relatively more expensive than buying $5000 lots.
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#1; Asset Allocation is especially important for long term retirement investing. You may determine that 25% of your investments are International stocks, 40% can be Large Cap stocks etc…… (percentages are not neccessarily what you should do). All good books on retirement investing will cover this.

#2;
Always do "like" dollar amounts vs. an equal amount of shares. Then your exposure will be roughly the same.

#3;
Another way of doing it is "Position Sizing". This way you can first determine your maximine loss per each stock. You then find the best place for a "stop" order. Then adjust your share size based on those numbers. This would be a more
proffessional way managing your risk.
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pick up…..Portfolio Theory and Performance Analysis (The Wiley Finance Series) (Hardcover……….
usually you should have 10 to 20 stocks………and part in fixed income and part in cash
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I have been investing in my IRA and DRIP Plans for quite some time now.

My IRA is professionally managed, but my DRIP Plan I choose the stocks. And my DRIP Plan has been outperforming my IRA.

I have 3 companies in my DRIP Plan that I purchase once a month, usually $150 per month for each company.

I have been buying US Bancorp , Walmart and Johnsosn and Johnson since I started my DRIP.

I have been very pleased with the results.

My suggestion is to keep the number of companies you invest in down to 3 or 4.

But it is your money.

Good Luck
References :
http://www.low-cost-stock-recommendations

.com

DRIP Section

Four or five stocks are not nearly enough to be adequately diversified. An investor holding only four or five stocks would be exposed to a tremendous amount of risk.

Some professors of finance will tell you that you need 14 to 16 stocks spread across six to eight industries to be adequately diversified in domestic large-cap stocks, but that opinion is a bit outdated. Others say 25, and there's some pretty good evidence that 40 different stocks spread across the industries and industry sectors will provide full diversification across the domestic large-cap universe. But leaves out about 75% of the worldwide stock market, and then there are bonds, commodities and real estate, which provide additional diversification.

Mutual funds, especially index funds, provide good diversification with a relatively small initial investment.

Asset allocation should be a dollar amount based on a predetermined percent of the total portfolio, where the percent is the desired allocation to a specific asset class or industry. As stocks are purchased in round lots of 100 shares, it can be difficult to get the desired weightings in small portfolios. Mutual funds overcome this obstacle, as they are purchased in dollar amounts rather than number of shares. The only constraint is the minimum initial and subsequent purchase amounts set by the fund managers. Initial purchase amounts vary from a few hundred dollars to thousands of dollars. Subsequent minimums are usually significantly less.
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Go with a round number of shares - fractional ownership adds costs.
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