High-priced stocks can feel intimidating due to psychological biases. A $50 drop on a $1,000 stock may feel worse than $5 on a $100 stock, even though the percentage loss is the same.
1. Influence: High nominal prices may deter some investors, despite the percentage risk being identical to lower-priced stocks.
2. Avoidance: Many avoid stocks like Netflix or Berkshire Hathaway due to high prices, even though fractional shares or ETFs provide access.
3. Value vs Price: While a high price doesn’t mean a stock is expensive, fear of larger downside risks can outweigh rational thinking.
4. $5,000 Allocation: A balanced strategy might include:
$2,000 in Nvidia: Strong growth potential.
$2,500 in Netflix: Long-term streaming leader.
$500 in SOXL: High-risk, high-reward exposure.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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