Low Priced Stocks vs High Priced Stocks – Which is better?

Inexperienced investors often confuse the share price of a company with its value. Let us understand this with an illustration. If an investor is given an option to buy either a stock priced at ₹ 10 or stock priced at ₹ 10,000, the possibility of such an investor buying the low-priced stock is quite high. As such, the typical retail investor suffers from a misconception that higher the price, lower are the chances of making serious money from a stock without taking into account other factors like valuation parameters such as price to earnings multiple, price to book value or dividend yield which is a serious fallacy. (more…)

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