OK. I have a friend with whom we disagree on money vs. shares in the stock market. Let’s say I have 10 shares of a company’s stock for 100 per share. So, a total of $1000 in this particular stock. In my mind, if I sell a share, I then have 9 shares worth $900. So, in the next year or two, I only have 9 shares with the possibility of increasing, when that stock goes up. (hopefully)
The friend says it doesn’t matter - if I have $900 working for me in that particular stock, it is still $900 working for me, and the number of shares doesn’t matter.
Which one of us is right and why?
Most of us look at the percentage gain in a given period. Your friends $900 approach comes closer. What is the value at the end of the period? Number of shares does not matter.
It is still $ 900.00 working for you UNTIL you sell the stock at a loss or at a gain. Shares don’t matter.
I’m going to side with your friend here. You’re not wrong but they have the right perspective.
For Fools, the number of shares is as irrelevant to investing success as the market price of the company’s shares. What matters is the value of your position.
Think of it this way. Whether you have 10 shares at $100, 100 shares at $10, or one share at $1000, you still have a position valued at $1000. If the market price of that company goes up 10%, then your position becomes worth $1100. It doesn’t matter how many shares or the price per share - the total value of the position will go up.
If you have a stock split, such as the 1:20 split coming to Alphabet and Amazon, the value of your position won’t change. This is why stock splits are described as immaterial to the performance of an investment.
Who notes another way to look at it is that if a company gains 10% in the stock market, your number of shares doesn’t go from 1 to 1.1…
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