Investing 102

[GregWeld]

The price you pay is determined purely by the lot that is offered by the seller.... buyers and sellers are matched up and the transaction is completed.

If you want to know exactly what you are going to pay --- DON'T put in a "market order". Learn how to put in a "Limit" order.

[68Cuda]

Originally Posted by GregWeld

The price you pay is determined purely by the lot that is offered by the seller.... buyers and sellers are matched up and the transaction is completed.

If you want to know exactly what you are going to pay --- DON'T put in a "market order". Learn how to put in a "Limit" order.

I "almost" always do limit orders. What the poster was referring to was the fact that it seems that the automatic reinvestment of dividends was done at various price points depending on the broker. What I was trying to get across was that the execution of the purchase was of different lots at slightly different times and it was likely random chance on the resulting price more than anything.

[GregWeld]

Originally Posted by 68Cuda

I "almost" always do limit orders. What the poster was referring to was the fact that it seems that the automatic reinvestment of dividends was done at various price points depending on the broker. What I was trying to get across was that the execution of the purchase was of different lots at slightly different times and it was likely random chance on the resulting price more than anything.

EXACTLY.


The market is a PER TRANSACTION place. If one broker re-invests the dividend 2/100 ths of a second later or earlier than the "other guy" -- then his price will be different most likely.

[Brewtal66]

Well it's official, I bought my very first stock today. I had an extra $100 laying around so I decided to invest it instead of spend it on car parts.

I bought one share of Starbucks, SBUX.

Personally, I don't go there. But my wife goes there almost daily. It looked good on paper (low on left, high on right) with the 5 year projection being almost 200% growth and the increasing dividend. But the other important factor here is that since my wife loves Starbucks, this is a way to get her involved and interested.

She's great with money. In fact she handles all the bills and everything. But we haven't been investing. She's never done that before, so this is a good way for both of us to dip our feet in the water.

Thanks to all of you, and especially Greg for helping explain it all!

[GregWeld]

Originally Posted by Brewtal66

Well it's official, I bought my very first stock today. I had an extra $100 laying around so I decided to invest it instead of spend it on car parts.

I bought one share of Starbucks, SBUX.

Personally, I don't go there. But my wife goes there almost daily. It looked good on paper (low on left, high on right) with the 5 year projection being almost 200% growth and the increasing dividend. But the other important factor here is that since my wife loves Starbucks, this is a way to get her involved and interested.

She's great with money. In fact she handles all the bills and everything. But we haven't been investing. She's never done that before, so this is a good way for both of us to dip our feet in the water.

Thanks to all of you, and especially Greg for helping explain it all!

Think about it --- when the thread was started (12/2011)-- SBUX was $22 a share. Oh well..... better late that never!

[Vegas69]

Nice Tim, I have a stake in them too. They do have a unique market cornered at this point. When I analyzed them, their debt was increasing, but so was their net revenue.

[Brewtal66]

Originally Posted by GregWeld

Think about it --- when the thread was started (12/2011)-- SBUX was $22 a share. Oh well..... better late that never!

Yeah but back then I didn't have two dimes to rub together!

[slow4dr]

Originally Posted by GregWeld

The price you pay is determined purely by the lot that is offered by the seller.... buyers and sellers are matched up and the transaction is completed.

If you want to know exactly what you are going to pay --- DON'T put in a "market order". Learn how to put in a "Limit" order.

Can a "Limit" order be applied to a dividend reinvestment? I only ask because that was what the original question was derived from.

[GregWeld]

Originally Posted by slow4dr

Can a "Limit" order be applied to a dividend reinvestment? I only ask because that was what the original question was derived from.

Ah - no it (dividend reinvestment) can't -- that's all just done automatically.


I was perhaps confusing -- in that I was trying to make the point that the ONLY WAY someone would get the exact same price - regardless of brokerage etc - would be to enter a limit order.... otherwise every transaction is likely going to be at various prices. Just look at a chart of DAILY activity for the name.... and then look to see how many shares trade per day - and the average daily trading etc...

[GregWeld]

I love this Warren Buffettism.....



Americans LOVE stocks when they're expensive and HATE them when they're cheap.


SO TRUE!


Resist the impulse to CHASE a rising market..... but at the same time - we have to guard against the market pulling out of the station for a run and we're standing on the platform holding our putz.....

It's why I URGE YOU to just buy when you're ready.... high or low.... When the market is high - you're $1,000 will buy fewer shares.... when the market sells off and everybody runs for the hills.... you're $1,000 will buy MORE shares...

In other words GET OVER IT...... you'll get nowhere if you're not "IN" and you're not buying enough shares at any given time that it's going to make a big deal in the overall scheme of things.

Think about it -- you have $1,000 -- and you're going to buy Home Depot (HD) = that $1,000 would buy 7 shares at $135..... and so your purchase today would be 7 X 135 = $945

Had you bought at the 52 WEEK LOW -- of $109 -- you'd have bought 9 shares! So that would be 9 X 109 = $981

So had you done both those buys -- you now have 16 shares for an AVERAGE COST of $120 (add both purchase costs $945 + $981 = $1,926 divided by 16 shares.



See how that worked out?? GET OVER IT..... you're reward is ZERO if you invest ZERO.