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How many shares should I buy?

How many shares should you buy (great question Lee)?

The minimum you can purchase is one share.  You can buy fractional shares with your dividends in certain types of brokerage accounts. Our purposes we are always talking 1 share.  Stock is traditionally traded (bought and sold) in 100 share blocks.  Any thing less, say 53, 94, or 5 is considered an "Odd Lot", and an Odd Lot" trade.

Here's how it works:

You buy 1 share of Stock at $5.00 + $1.00 commission = $6.00 cost but $5.00 value

You buy 10 shares of Stock at $50.00 + $1.00 commission = $51.00 cost but $50.00 value

You buy 100 shares of Stock at $500.00 + $1.00 commission = $501.00 cost but $500.00 value


Your stock goes up by $2.00 in one year.

You buy 1 share of Stock at $5.00 + $1.00 commission = $6.00 cost but $5.00 value
 You have 1 share now worth $7 = $7.00
 
 You buy 10 shares of Stock at $50.00 + $1.00 commission = $51.00 cost but $50.00 value
 You have 10 shares now worth $7= $70.00

You buy 100 shares of Stock at $500.00 + $1.00 commission = $501.00 cost but $500.00 value
 You have 100 shares now worth $7 =&700.00 
You sell:

1 Share - $1.00 (commission less share price $5) = $1 profit 
10 Share - $1.00 (commission less share price $5) = $19.00 profit 
100 Share - $1.00 (commission less share price $5) = $199.00 profit 

The more shares you buy the greater the reward and the less the stock has to go up in price to make a profit.

William you said I could make money that does seem like much for a year?

Picture this, it is a true story of a man I met while working at my brokerage firm in 1997.  This man invested in Microsoft (MSFT) in 1986 he heard of this little stock that came out for $21 a share it was now at $114 and about to split.  Which means he would have 2 shares for every one he held.  He bought 100 shares (math will very on actual dollar amounts due to market variables for our purposes it will not:

100 Shares Microsoft at $114.00 = $11,400.00

In September, 1987 the stock split

200 Shares Microsoft at $57.00=  $11,400.00

Stock rose to 120.75 by April 12, 1990 spit again 2 for 1

400 Shares at $60.38 = $24,152.00


Stock rose to 100.75 by June 26, 1991 spit again 3 for 2 

600 Shares at 66.00 = $ 39,600.00

Stock rose to 112.50 by June 12, 1992 spit again 3 for 2 

900 Shares at $75.38 = $67,842.00


Stock rose to 97.75 by May 20, 1994 spit again 2 for 1 

1,800 Shares which rose to 152.88 on December 6, 1996

He was worth = 275,184.00 in ten years time.

So he invested $114,000.00 in reality he was really worth $275,184,000.00  the stock spilt 2 for 1 went back up to 155.13 on February 20, 1998 last time we spoke he was worth $458,000,000.00 on his $114,000 investment.

While every stock will not do that, this is an example of actual life events.  You now understand why Bill Gates is so rich.So I take it you are ready then for another stock pick?


 



 
 

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