Investing $10k, how many $10 and under stocks should I consider?

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12-19-2009 , 05:47 PM

adbynot

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Limited funds to start of $10K, what do you think would be a good number of stocks to hold in my portfolio with stocks ranging $10 and under?

I don't want to leave myself thin on anything and it is more of a long-term position that I am considering.

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12-19-2009 , 06:13 PM

nuclear500

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Whats so special about $10? Why not $20? or $5?

My point - the dollar price of a stock should not be the deciding factor in whether you make a purchase. My guess is you're making a false assumption that stocks valued less then $10 are small capitalization stocks.

You should probably learn more about investing and the meaning of valuation if you intend to purchase stocks instead of funds.

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12-19-2009 , 07:11 PM

Brons

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just buy one share of 1000 issues. set for life.

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12-19-2009 , 07:26 PM

adbynot

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Join Date: Jul 2008 Posts: 434

Quote:

Originally Posted by nuclear500

I'm thinking of $10 and under because of the amount of money that I am starting out with, obviously that can and will change over time but I don't see how buying $100/share stock is going to keep my portfolio diversified.

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12-19-2009 , 07:28 PM

Brons

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Wat?

Tell me what the difference is in buying 1 $100 share or 10 $10 shares.

By the way: in before lock.

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12-19-2009 , 07:36 PM

nuclear500

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Originally Posted by Brons

Wat?

Tell me what the difference is in buying 1 $100 share or 10 $10 shares.

By the way: in before lock.

10 > 1

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12-19-2009 , 07:45 PM

nuclear500

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Originally Posted by adbynot

The number of unique securities you own doesn't dictate whether a portfolio is "diversified"

You are talking as if you want to own 20-30 or more stocks - in effect you'll create your own miniature Total Stock Market that will, most likely, under perform a simple index ETF like VT or VTI or SPY.

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12-19-2009 , 07:49 PM

adbynot

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Join Date: Jul 2008 Posts: 434

There is no difference in that they both total $100, the problem might be that the $100 share might have a harder time making a better % compared to the $10 share. I know they both have to rise by the same percentage but I think the $10 share has more room to climb then say the $100.

BTW, why is everyone on this forum so sour over everything? Is it because the house that you have fully mortgaged is worth 10c on the $1 now or what?

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12-19-2009 , 07:50 PM

adbynot

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I am really looking for a discussion on what the best approach is for someone starting out and that's about it.

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12-19-2009 , 07:53 PM

#10

adbynot

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Originally Posted by nuclear500

This shows just how green of an investor I really am, thanks for pointing this out to me.

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12-19-2009 , 07:55 PM

#11

nuclear500

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Quote:

Originally Posted by adbynot

This is where you would be wrong and why you should stop focusing on the price of a stock.

The price of a stock has absolutely nothing to do with its potential growth.

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12-19-2009 , 07:57 PM

#12

Brons

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Originally Posted by adbynot

This is not true.

What company can grow better:

The company having 100 million shares outstanding worth $10 a piece

or

The company having 10 million shares outstanding $100 a piece.

Another exercise: Berkshire Hathaway (Buffett's company) has a B class worth about $3,3k a share right now. Next year they're going to do a stocksplit taking every B share and multiplying it by 50. The price will also be divided by 50 because there will be 50 times more shares outstanding. So next year you own 50 B shares worth $66 a piece. Does the company have more room to grow now?

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12-19-2009 , 07:57 PM

#13

fish491

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Join Date: Nov 2009 Posts: 3,130

Quote:

Originally Posted by adbynot

I am really looking for a discussion on what the best approach is for someone starting out and that's about it.

If you're really that 'noob' ( I know it has a bad connotation but I'm saying it in a nice way, that you're just new to it-
you should really be certain that if you lose the 10k , or a part of it that you still can cover expenses

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12-19-2009 , 07:58 PM

#14

adbynot

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Quote:

Originally Posted by nuclear500

This is where you would be wrong and why you should stop focusing on the price of a stock.

The price of a stock has absolutely nothing to do with its potential growth.

But, with a $10k limit, how can I effectively be diversified and hold high $ stocks?

Should I be looking at maybe just 4-5 great stocks at whatever price as long as they don't all belong to the same category and just go with that then?

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12-19-2009 , 07:59 PM

#15

adbynot

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Quote:

Originally Posted by fish491

What is a "noob" and what expenses are you talking about?

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12-19-2009 , 08:00 PM

#16

Brons

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Quote:

Originally Posted by adbynot

You will have a hard time diversifying if you buy Berkshire Hathaway. Other stocks are cheaps enough that you can diversify plenty with $10k.

Not that you should as there are ETF's out there that diversify for you.

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12-19-2009 , 08:03 PM

#17

Brons

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And to clarify: you shouldn't worry about the number of shares you buy but the dollar amount.

Owning 1 or 10000 shares doesn't matter if the dollar amount is the same.

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12-19-2009 , 08:04 PM

#18

adbynot

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Quote:

Originally Posted by Brons

And to clarify: you shouldn't worry about the number of shares you buy but the dollar amount.

Owning 1 or 10000 shares doesn't matter if the dollar amount is the same.

I guess this makes sense just that having one share of something seems weird and do they even offer shares in 1 stock increments?

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12-19-2009 , 08:06 PM

#19

Brons

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Some brokerages and/or exchanges might charge you more for odd lots (not in multiples of 100). Not sure if that's still the case today.

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12-19-2009 , 08:08 PM

#20

adbynot

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Would you then say that buying into an ETF might be the best way to go for someone that has little knowledge of the stock market and then just let that go and see how it does?

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12-19-2009 , 08:09 PM

#21

Brons

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Definitely. Check the stickied thread on top. Plenty of info there.

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12-19-2009 , 08:12 PM

#22

cwar

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Quote:

Originally Posted by adbynot

Would you then say that buying into an ETF might be the best way to go for someone that has little knowledge of the stock market and then just let that go and see how it does?

Someone without knowledge of the stock market shouldnt be investing like this.

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12-19-2009 , 08:16 PM

#23

adbynot

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Quote:

Originally Posted by cwar

Someone without knowledge of the stock market shouldnt be investing like this.

Shouldn't be investing in an ETF?

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12-19-2009 , 08:20 PM

#24

adbynot

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I also starteed a free 14-day trial with The Street.com with an option to purchase a yearly membership for $299. Is this a totally ******ed thing to do?

I should also point out that the $10k that I plan to invest can grow tax-free forever as it will be is a TFSA. Those not familiar with this, it is a Canadian government account that lets it citizens have an option of $5k per year that they can earn tax-free with. Having an account like this, does this also change on what I should be investing in?

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12-19-2009 , 08:27 PM

#25

cwar

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All I meant was I you shouldnt be speculating by hand picking stocks IMO, as far as I know TheStreet.com is a stock picking service and again, you shouldnt be speculating without knowing a lot more.

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