Why Per-Share Price is Not Important
Monday May 12, 2008
Why is a stock that cost $50 cheaper than another stock priced at $10?
This question opens a point that often trips up beginning investors: The per-share price of a stock is thought to convey some sense of value relative to other stocks. Nothing could be farther from the truth.
Comments
TRYING TO HELP A FRIEND. SHE HAS MONEY INHERITED. BROKER IS IN FLA. SHE HAS BEEN TOLD WHERE SOME OF HER INVESTMENT ARE. ONE IS REAL ESTATE SECURITY FUND. LOOKING IT UP SHOWS ITS SOME SORT OF ELECTRONICS FIRM AT $ 0.10 PER . IS THERE A ” REAL ESTATE SECURITY FUND”. IF POSSSIBLE COULD YOU PLEASE GET ME AN ANSWER.
THANK YOU.
PETER SEPPALA
Amazing that so many are scared by big numbers on price of shares. Obviously BRK.A is one. Or for those who are short about a hundred forty or so thosand a share B shares are 1/30 the price of A.
On the other hand many in the executive suite are scared when shares pass a hundred bucks a share. And they spend a lot of hard cash for all the paperworks and printing of new shares because they split 2 for one. More silliness can be hardly imagined.
There is a prolem when shared drop below two or three bucks. Sort of like an ice coverd down hill on the road. It is much harder to stop the car, or in this case stock price. There is a disadvantage in too low a price. Pink sheets and delisiing from the exchages among them.
As a buy and hold type I only worry about total value and direction of earnings.