facebookIs there a difference between choosing a stock that is higher price (few hundreds) vs a stock that is lower price (less than 50)? - Seedly

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Anonymous

14 Nov 2020

Stocks

Is there a difference between choosing a stock that is higher price (few hundreds) vs a stock that is lower price (less than 50)?

Is there is a diff between holding few pcs of higher price stock vs more pcs of lower price stock? And few different stock vs many differrent stock? How should I make decision aside looking at fundamental of companies?

Discussion (3)

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All the answers provided here are awesome! They provide so much context to just a simple question.

To add on, a difference you can actually clearly see is how much upfront cash you have to fork out for a stock that is of higher price, and how it contributes to your portfolio.

Let me give an example below:

Suppose you have $10k to invest, and you have shortlisted HKG:9988 (Alibaba) as a company you would like to buy. However, the minimum lot is 100, and that means you will have to fork out ~SGD$4500 (as of 14th Nov). This will mean the stock will constitute 45% of your portfolio. Depending on whether you are more concern with diversification or don't mind having such heavy weightage of a single stock in your portfolio, the higher price might be an issue.

Also, the extreme case, let's say I want to buy Berkshire Hathaway class A, I will need ~USD$342K (as of 14th Nov). Now that's a difference because I can't even afford 1 share haha.​​​

Try not to look at the absolute price of a share as the company being more expensive or cheaper. It is an illusion. It is dependent on the total valuataion of the company as well as the number of shares issued.

a $50 stock can be expensive but a $1500 stock can be cheap

Quite a few questions to answer hahaha

Ok, so for every company, they have a certain no. of shares ...

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