Lose chance to make big money because of 1 cent
By scheng1
@scheng1 (24649)
Singapore
March 5, 2016 6:14am CST
Is 1 cent so important?
You may not think so, but there are people who miss out the chance to make big money because of 1 cent.
Why is that so?
When they see a great stock selling at $1.31, they are not willing to invest.
They want to buy only at the price of $1.30. They just do not want to pay 1 cent more.
When you reason with them that the dividend is at least 5 percent, they still are not willing to pay 1 cent more.
When they see that the share price goes up to $2.50, they regret.
That is the time when they realize the foolishness of not willing to spend 1 cent more to earn a return of 79 cents.
This kind of stupidity happens to all investors, especially new investors.
12 people like this
12 responses
@scheng1 (24649)
• Singapore
5 Mar 16
Yes, when price increases a great deal later on, the customers will complain about the increase.
Sometimes in the retail industry, strange things happen.
For luxury brands, such as Louis Vuitton, the higher the price, the higher the aspiration to own the good.
The customers do not complain about the increase in price.
They want it expensive so that they can show off.
1 person likes this
@scheng1 (24649)
• Singapore
5 Mar 16
Sometimes it does not work this way.
When you want to buy a pair of running shoes, you go to the first store, and they quote you $120,
The second store quotes you $125.
By the time you reach the third store, and you find that the price is $125, you regret not buying it at the first store.
By the time you go back, the pair that you want are sold, and they do not have any more pair that are of your size!
1 person likes this
@allknowing (153529)
• India
5 Mar 16
When a price is quoted it would be something like 3.99 but not 4 (lol)
1 person likes this
@scheng1 (24649)
• Singapore
6 Mar 16
Those who prepare to lose are the ones who do not know anything about investment.
Investing is about choosing great companies that will grow even greater or stable businesses that offer services in demand all the time.
Think about the railway companies, utility companies, the banks, and other companies that have products and services for the world.
1 person likes this
@scheng1 (24649)
• Singapore
5 Mar 16
A lot of new investors do not know how to judge the fundamentals of the company.
Even many so-called value investors do not know how to judge the value of a company.
If you are using future cash flow method, then you have to estimate the future value, and then turn into current value.
if you are using book value, or asset, you have to discount some assets that will lose value when the company closes down.
It is impossible to put a price and says that the company is valued at $1.20 and not a cent more.
1 person likes this
@zebra2222 (5268)
• United States
5 Mar 16
You are quite right. Rounding off can be costly.
1 person likes this
@garymarsh6 (24085)
• United Kingdom
5 Mar 16
Sometimes that is good self control by sticking to a budget. Sometimes for the good and sometimes for bad. They just lucked out on this occasion.
1 person likes this
@scheng1 (24649)
• Singapore
5 Mar 16
It is not a matter of luck out or not.
They just do not pay attention to the big picture.
They are not aware of the real worth of the company.
When Citibank share price dropped to a dollar a few years ago, most retail investors did not buy.
They did not realize that a big bank like Citibank just could not sink.
The sovereign funds were willing to sink their money in because they knew the fundamentals.
@Ladypeace (2028)
• Singapore
5 Mar 16
I don't invest in stocks but I get what you mean. Making a decision based on a plain number lacks foresight. It may sound ridiculous but yet some are doing that.
1 person likes this
@scheng1 (24649)
• Singapore
5 Mar 16
Yes, many people are doing that.
There are people who use half an hour to bargain for a dollar less when they want to buy things.
they do not see the stupidity of their action.
Half an hour for a dollar less means that they have half an hour less to do other things in life.
I bet their hourly rate is higher than $2, so why should they waste half an hour just to save a dollar.
1 person likes this
