Quote:
Originally Posted by WSSix
So given the choice between two stocks that both have done well over the years, would you recommend purchasing fewer shares of a more expensive stock or more shares of a less expensive stock? Does it even matter or is it personal preference?
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Dollar amounts are what matters --- so if you're going to invest $10,000 -- then I'd pick FIVE stocks and put in $2500 per... or 10 stocks and do 1,000 each.
I wouldn't match shares.... you'll never get it right and it's too hard to track!
If you put in 10,000 and next year your account is at 12,000 you know you're okay -- one stock will have done great - a couple okay - and a couple not so hot. If you've picked good names... don't do a thing... because I'll bet you that the next year you're mix will have different results and the one that was just "okay" might have moved up the ladder and be "the hot one".... that is WHY YOU DIVERSIFY! I'll guarantee that you can't have all 1O stocks (or 5) all up and you'll never be able to tell me in advance which one is going to be the star. Just pick 'em - re-invest the dividend - add money when you can into new names (more diversity) and pay a modest amount of time listening to the news or read the business page.
OLD RULE TO GO BY...... When INTEREST RATES ARE HIGH --- STOCKS WILL DIE.... So there will be a period when the "flight to quality" will move out of stocks and into bonds and interest bearing instruments... but if you try to "time" that - you'll always be behind and lose money trying to chase the market. Just diversify - pay attention... and buy more when they're down cause you get more shares and that brings your average cost down - over time - your TOTAL YIELD will be a home run.