There’s nothing wrong with buying one share of a stock, assuming the brokerage fees and commissions don’t eat up more than 1 or 2% of your investment (that’s just a general rule of thumb I like). And don’t feel like you have to make round purchases in 100 share lots of anything — I often buy odd lots of stock, 53 shares here, 118 shares there, etc., the amount you invest is important, the amount that each share costs is unimportant (except for the fact that you want it to cost less than it’s worth, of course).

And I think there’s no difference between a $5 stock and a $500 stock, it’s just that you might have to buy one share instead of 100 shares. Unless you’re trying to do something more active like hedge with options, which is almost always a losing strategy for small positions under a couple thousand dollars, the number of shares you own doesn’t matter.

And everyone’s circumstances and preferences are different, but I’m inclined to think that if you can’t buy a single share of a $500 stock, then it probably makes more sense to let your money build up in a good mutual fund for a while before you dabble in individual stocks too much.

Berkshire Hathaway, whose cheapest shares cost close to $5,000, is probably the one exception — that’s the only desirable stock I know of that you can’t get at least one share of for under $1000, which is a decent opening position size for a small investor.

Other than Berkshire in nosebleed territory you’ve got Seaboard, a few small banks, and I think that’s it for shares that are priced over $1000 … though Washington Post, CME, Google and White Mountains Insurance and even Markel could very well get there before too long.

When you talk about a “significant” position, the only number that matters is the dollar amount you have invested, not the number of shares that represents. I’d much rather have a dozen shares of Google than 300 shares of Dell right now.

Thanks for the comment.