Global Macro Trading Journal
- Thread starter Daal
- Start date
You're buying businesses, not stocks, so the price of a share is irrelevant. Apple would be the same exact company if it did a 6000:1 stock split and traded at $0.10 instead of $600.
Now if we're talking about penny stocks that are priced that way just to draw the attention of the speculators and operators who traffic in such areas, that's a different story.
I remember buying some individual farming stocks in NZ a few years back. They were big, profitable, long-standing companies, but all had share prices less than a dollar. I guess it's just convention over there to have lower share values, but the business and my ownership is the same whether its 10,000 shares at $0.50 or 100 shares at $50.
BTW, I never should have sold those suckers. It left me with a big tax bill and they've continued doing well and paying divvies.
Now if we're talking about penny stocks that are priced that way just to draw the attention of the speculators and operators who traffic in such areas, that's a different story.
I remember buying some individual farming stocks in NZ a few years back. They were big, profitable, long-standing companies, but all had share prices less than a dollar. I guess it's just convention over there to have lower share values, but the business and my ownership is the same whether its 10,000 shares at $0.50 or 100 shares at $50.
BTW, I never should have sold those suckers. It left me with a big tax bill and they've continued doing well and paying divvies.
Right, but the post that started this conversation referred to penny stocks as "lottery stocks," i.e. stocks that are dirt cheap for a reason with a hypothetical chance to go up fivefold etcetera.
If, say, General Electric decided to do a 100 for 1 split, nobody would buy it at 19 cents hoping it quintuples to $1.00. (Or at least no one with any sense.)
OTC shares (pink sheets etc) can wind up in penny stock land for different reasons / lost in translation etc, but as a general rule respectable businesses don't hang out down there. This is an observation of U.S. markets, not an iron law with no exceptions.
Does anyone know what are these rumored measures?
http://www.telegraph.co.uk/finance/...aunches-strategy-to-counter-ECB-largesse.html
http://www.telegraph.co.uk/finance/...aunches-strategy-to-counter-ECB-largesse.html
Yes, these stocks can be driven up(Only to crash later) through spam alerts and so called penny stocks 'newsletters', sometimes they stay more than 100%+ overvalued for quite a while before the crash, this shows how much more inefficient they are
I'm all for betting on black swans but even Taleb argues that if you overpay for the exposure the black swan becomes you not getting rich rather than getting rich
It's the usual macro-prudential + moral suasion stuff that CBs all over the world have been coming up with. Like limits on leverage for bank balance sheets, hard limits on LTV for mtges, more stringent collateral requirements and higher provisions for loans, that sorta thing.
Amazon - they lose money on everything, but make up for it with volume. Might as well value the stock on "eyeballs" like those Internet co's of the late 90s.
http://seekingalpha.com/article/465111-amazondeal-does-it-again?source=kizur
http://seekingalpha.com/article/465111-amazondeal-does-it-again?source=kizur