Stock Lot
Stock Lot
Does buying a lot of stock in one company drive the price down?
I am new to investing and was told not to buy all that I want in one shot because it will affect the price. Should I space it out over months? I am talking about 25000 to 50000 shares.
I fully intend to contact an investor...just wondering about the logic since I am a novice.
It depends.
1. What is the bid/ask volume of the underline security?
2. What is the price of the security?
If you are buying 25,000 shares of stock, and I hope you are not buying some penny stock (stocks under $5.00, and especially under $1.00), and if the spread is this:
800 @25.00 x 1000 @ 25.04
This means that the current market maker is offering to sell you 1000 shares at 25.04, or buy from you 800 shares at 25.00.
If you buy/sell a low volume/ inactive or thinly traded stock and enter a market order, you could pay up the wazoo or get a big drop in the bid for that stock.
My experience tells me that you are not looking at any serious company. 99.999% of the people on Y!A don't have serious assets. If they did they would seek a professional for help. I'm here to help people and tell people to go get help. One should not use boards for their sole investment advice.
Penny Stock FAQ
http://answers.yahoo.com/question/index?qid=20080410141459AAhUonh&show=7#profile-info-C6Oi6AkLaa
Now, if you were taking 25-50,000 share purchase or sells on the S&P 500 Index (SPY), now, you could more easily buy/sell without moving the market to a material extent.
But if you were doing that (trading the SPYDR) you would be looking at currently $2.1 million purchase on 25,000 buy (@84 currently). That is how I know you are not looking at a serious stock. I know you don't have that money or you would not be asking this question here.
Even if you were speculating with a company such as Citigroup @ 3.80 currently, that is still a $95,000 buy. And unless you had $95,000 that you could risk it all, and it would have no material impact on your financial picture, then there is no reason to make that currently highly speculative purchase.
And in the unlikely event you are making these large dollar purchases, I sure hope you have a hedging strategy in place and a sell discipline BEFORE you enter the position.
So what are you looking at. Price and or name of stock?
I still find it amazing how people with no material market knowledge or financial background come to Y!A and post shoddy advice. That is why I tell people to go seek a professional advisor with 15+ years of real market experience for advice.
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