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The Goldman Sachs Group, Inc. Message Board

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  • madmanshooter madmanshooter Jun 13, 2007 9:31 PM Flag

    long 25 shares

    Could you explain the theory behind buying 25 shares? If the stock is up ten points, you will make 250 minus commissions. The risk reward ratio doesn't seem very persuasive. Should someone who can only afford a 5000 investment try to make money with a 230 stock? What is your thinking?

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    • stock price doesn't mean anything to me; I'm playing percentage gains. If the stock is selling for 22 instead of 220, and now I buy 230 shares instead of 23, a 10% gain is a 10% gain. You can't assume just because a stock price is less that it moves more, i.e. one priced at $20 will move more than one priced at $200. Look at Google, Berskshire Hatthaway, etc.

      It's true though that $15 or $20 in commission can seriously eat into the gains when you're only making a couple hundred bucks a trade. But hey, something is better than nothing. Those couple hundred buck trades start to add up if you get lucky enough and often.

 
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