Stocks/shares investments

JDR13 · June 17, 2018

you said:
I strongly disagree with this logic. The actual price of the stock should have little consideration if you buy it regardless of your income. That is there is virtually no difference between a company with 1 million shares at $1000 and a company with 100 million shares at $10. It is the same investment. The argument that you can buy 1/2 a share (50 shares at $10) instead of 1 share at $1000 is weak. If you need the cash just save longer to buy the share.
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The fundamental question should be benefit vs risk for this opportunity vs other opportunities.
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We have to look at why the company did well historically and its prospect for continue growth in traditional markets as well as new markets vs the competition and changes in landscape.
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Given the current price (not price of the stock but valuation of the company relative to other factors) I presonally think it is a risky investment esp if we are talking about a 5 year window. I can see a lot of reasons why growth would slow or why the stock might go negative relative to the current valuation vs the potential for growth acceleration or valuation acceleration (valuation acceleration a term i am coining is when the stock price goes up on expectation and is not relevant to whether that expectation is realized).
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You might argue that my view is incorrect or you disagree with my view but to argue that the actual price of a share makes it a bad investment without regards to valuation or market cap is imho a very poor and dangerous (as in bad advice) to be making.
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this doesn't mean you are right or wrong with regards to what the future holds for the stock but if you are right (or wrong) it is imho for the wrong reason.
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Last but least yes I understand you were not commenting on the investment itself but rather claiming that people shouldn't be investing $250 in one shot. Another point I would disagree. The average person should be saving quite a bit more per year esp when ti comes to retirement account. Yes i understand some youngsters will be hard press to do that but if they can afford a game console and a few games they can certainly afford to save a bit.

Indeed, you completely misunderstood what I said. I don't even understand how you came up with all that based on my statement.

In no way whatsoever did I say it wan't a good investment or that people shouldn't be investing $250 in one shot.

All I said is that the average joe isn't buying stocks at $250+ a share. That's a fact not an opinion.

Kordanor · June 17, 2018

JDR13 said:
Indeed, you completely misunderstood what I said. I don't even understand how you came up with all that based on my statement.

In no way whatsoever did I say it wan't a good investment or that people shouldn't be investing $250 in one shot.

All I said is that the average joe isn't buying stocks at $250+ a share. That's a fact not an opinion.

You don't think so? I mean I guess more people will just buy packages.
But considering buying shares of a single company it really doesn't matter if you spend 2000$ for 8 shares 250$ each or 2000$ for 200 shares 10$ each.

I am not sure whether I'd consider myself as "average Joe", but the average Joe also probably doesn't buy stock at all, and rather takes a big credit to buy a house or spends the money for going out drinking and vacations. I know a couple of other non-professionals like me, who did or do not have any problems with 250$ shares.

you · June 17, 2018

The average Joe isn't buying individual stocks.

JDR13 said:
Indeed, you completely misunderstood what I said. I don't even understand how you came up with all that based on my statement.

In no way whatsoever did I say it wan't a good investment or that people shouldn't be investing $250 in one shot.

All I said is that the average joe isn't buying stocks at $250+ a share. That's a fact not an opinion.

JDR13 · June 17, 2018

Kordanor said:
But if you think that 250$ for a single share is too expensive to even get into, then you probably should not buy stock at all. Purchases in these small numbers are not worth it, and the bank prices to do that purchases might eat up a lot of your profit.

That depends on what kind of trading account you have. Purchasing more shares of a lower priced stock isn't going to cost you any more than purchasing less shares of a higher priced stock unless you're not buying them all at once.

Of course if you're just buying a few shares at a time, it's going to cost you more if you're paying a transaction fee for every purchase. That's not an issue for me because I'm not paying any fees for transactions in the account I use to trade stocks.

I pay a transaction fee for mutual funds in my other account, but it's a negligible amount because those purchases are generally much larger and far less frequent.

As far as buying 1 share of a $250 stock vs more shares of a cheaper stock, there's no argument for one over the other unless we know how they're going to perform going forward which is obviously impossible.

JDR13 · June 17, 2018

Kordanor said:
I am not sure whether I'd consider myself as "average Joe", but the average Joe also probably doesn't buy stock at all, and rather takes a big credit to buy a house or spends the money for going out drinking and vacations. I know a couple of other non-professionals like me, who did or do not have any problems with 250$ shares.

you said:
The average Joe isn't buying individual stocks.

I'm talking about the average joe who is investing. I thought that was obvious.

JDR13 · June 17, 2018

Kordanor said:
But considering buying shares of a single company it really doesn't matter if you spend 2000$ for 8 shares 250$ each or 2000$ for 200 shares 10$ each.

It does if you're trying to decide between two companies that you think are going to perform similarly (on a $ per share basis) going forward.

you · June 17, 2018

But that is the very logic I argued is BAD investment advice. It doens't mean people follow it but the evaluation of a stock potential and potential % change in the future should be independent of actual share price.

It almost sounds like a convoluted argument that if you evaluate two companies future potential and the one that wins will have always have the lower price per share which should be blatantly false.
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As for your other comment again I don't know where you get this statistic that people are less likely to invest in a share that is 250 as oppose to 10 though I suppose you could make two arguments - one is statistically more stocks are likely to be closer to $10 a share than $250 share because many companies split to keep the price low - another is that there is a physiological barrier to buying shares above a certain price (which as a good investor you should be explaining that is not the correct way to evaluate the value of the stock - hence my earlier long winded comment).

Understand ?

JDR13 said:
It does if you're trying to decide between two companies that you think are going to perform similarly (on a $ per share basis) going forward.

JDR13 · June 17, 2018

you said:
But that is the very logic I argued is BAD investment advice. It doens't mean people follow it but the evaluation of a stock potential and potential % change in the future should be independent of actual share price.

It almost sounds like a convoluted argument that if you evaluate two companies future potential and the one that wins will have always have the lower price per share which should be blatantly false.

No, that's not what I said at all. My last post was poorly worded though as a stock at $20 per share going up the same amount as a stock that's $100 per share obviously went up a much higher % and therefore was simply a better investment.

you said:
As for your other comment again I don't know where you get this statistic that people are less likely to invest in a share that is 250 as oppose to 10 though I suppose you could make two arguments - one is statistically more stocks are likely to be closer to $10 a share than $250 share because many companies split to keep the price low - another is that there is a physiological barrier to buying shares above a certain price (which as a good investor you should be explaining that is not the correct way to evaluate the value of the stock - hence my earlier long winded comment).

Understand ?

A physiological barrier? Um..ok.

I think you mean psychological barrier, and yes, that's very much part of it. The average working class person, after paying their bills and not having a whole lot left over, isn't looking at stocks that are $250 a share.

Caddy · June 17, 2018

Buying individual stocks in general, is bad investment advice. But like gold fever, the promise of quick wealth means it will never disappear. Everyone thinks they're the minority of less than 5% that will beat the market (hint: 5% is quite a bit less than 100%).

If you're wanting to beat the market, then you need to be an expert and identifying undervalued companies. Pretty hard to do considering most stock prices have been already established (especially with companies like NVIDIA and AMD) by the company's proper value. Advice: If you're going to betting on 2 competing behemoths, at least hedge your funds. You might not beat the market over the long term, but you'll at least cushion the volatility a bit.

you · June 17, 2018

Pardon my tablet autocorrect. Anyway with hindsight what you said is true but with foresight you should ignore share price and focus on market cap.

JDR13 said:
No, that's not what I said at all. My last post was poorly worded though as a stock at $20 per share going up the same amount as a stock that's $100 per share obviously went up a much higher % and therefore was simply a better investment.

A physiological barrier? Um..ok.

I think you mean psychological barrier, and yes, that's very much part of it. The average working class person, after paying their bills and not having a whole lot left over, isn't looking at stocks that are $250 a share.

Pladio · June 17, 2018

you said:
Pardon my tablet autocorrect. Anyway with hindsight what you said is true but with foresight you should ignore share price and focus on market cap.

I think you may be missing the point.

Let's take Joe and Jane and Stocks A and B.
A is valued at $1k/share and is seen as undervalued and likely to go up in the near future.
B is valued at $250/share and is seen as slightly undervalued and likely to go up slightly in the near future.

Jane manages to save up over $1k/month for investments, so she immediately put this month's savings into A. Everyone will agree that that's the best option, I believe.

Joe manages to save up $500/month for investments, so he is thinking. Should he wait until next month to invest in Stock A or should he bite the bullet and invest in Stock B? I believe JDR's point and mine (also if I am speaking out of turn JDR, please let me know). that Joe should probably invest in B, because if he waited a month, Stock A may no longer be as undervalued as it is today and he would have lost out on Stock B's rise too.

The stock's price in this case does affect Joe's decision, making it a luxury stock for Joe who cannot afford it.

Obviously, all of this does not mean it is the "right" decision, but unlike what 'you' is saying, the stock price does affect what people are able to do, even with "foresight".
A second obvious point is that if you have saved up a large amount of money then this does not matter. However, there are people who invest on a monthly basis what they can afford.
A final point is that this is not an issue if you work with brokers who can offer Joe half a share at $500, which then makes Stock A the better target.

you · June 17, 2018

I don't think what you said is what JDR was saying. I think what JDR was saying is the stock that is $1 is more likely to see a greater % gain than a stock that is $250 because $1 is less than $250 and if taken out of context that is a dangerous statement to make.
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While what you say is true I hope ones outlook when investing is longer than 1 month. Furthermore at some point small investments become impractical because the % commission is taking a chunk out of how much you can earn. I pay a flat fee of $9 per purchase/sale. If I spend $100 buying stock and then selling it a month later - even if it goes up 20% I have to pay $18 in commission wiping out most of the gain.
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When we are talking about a stock that is $250 the 'wait' time in your description is likely to be non-material; though if the stock price were 250K (brk-a) the situation might be a bit different.
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I don't want to speak for others but I would hope that small time investor would have an outlook longer than a year (my normal outlook is 5 years).
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Also in the USA if you buy/sell stock under a year your tax rate increases significantly on the profits - and if you buy/sell under a month there are other regulations that need to be taken into account (basically you can't deduct losses).

Pladio said:
I think you may be missing the point.

Let's take Joe and Jane and Stocks A and B.
A is valued at $1k/share and is seen as undervalued and likely to go up in the near future.
B is valued at $250/share and is seen as slightly undervalued and likely to go up slightly in the near future.

Jane manages to save up over $1k/month for investments, so she immediately put this month's savings into A. Everyone will agree that that's the best option, I believe.

Joe manages to save up $500/month for investments, so he is thinking. Should he wait until next month to invest in Stock A or should he bite the bullet and invest in Stock B? I believe JDR's point and mine (also if I am speaking out of turn JDR, please let me know). that Joe should probably invest in B, because if he waited a month, Stock A may no longer be as undervalued as it is today and he would have lost out on Stock B's rise too.

The stock's price in this case does affect Joe's decision, making it a luxury stock for Joe who cannot afford it.

Obviously, all of this does not mean it is the "right" decision, but unlike what 'you' is saying, the stock price does affect what people are able to do, even with "foresight".
A second obvious point is that if you have saved up a large amount of money then this does not matter. However, there are people who invest on a monthly basis what they can afford.
A final point is that this is not an issue if you work with brokers who can offer Joe half a share at $500, which then makes Stock A the better target.

Kordanor · June 17, 2018

Yep. Also you can take the average gains of a bigger part of the market, let's say DAX(Germany) or NASDAQ (USA) as guideline. The NASDAQ has a return in 10 years of 12,76% yearly, a DAX 100 has a return of 7,1% yearly.
So if you invest just 500€ and paying 9$ (which seems to be really cheap) that's already a 2% loss which you have to combine with your potential wins, which is already a good chunk of your wins (in my case it's even 3%).
So especially when you got a flat tarif it makes sense to save more money and buy in bigger chunks.
Yes, if you are absolutely convinced you would have gained tons of money in the next month due to some "inside" knowledge, then maybe you can go for it but usually saving up seems to be the better idea imho.

Darth Tagnan · June 28, 2018

Still saving up and haven't made the jump yet.

Thing is, I'm very, very close to quitting my job and finally giving the "indie solo developer" thing a shot.

If I do that, I need some reserve cash - because I don't have a solid idea of how long it will take to develop the game I have in mind.

Investing under those circumstances would seem to be unwise.....

Stocks/shares investments

JDR13

SasqWatch

Kordanor

Wastelander

you

Lazy_dog

JDR13

SasqWatch

JDR13

SasqWatch

JDR13

SasqWatch

you

Lazy_dog

JDR13

SasqWatch

Caddy

Broken Screwdriver

you

Lazy_dog

Pladio

Guardian of Nonsense

you

Lazy_dog

Kordanor

Wastelander

Darth Tagnan

Guest