There was a new teaser email from the Oxford Income Letter folks this morning that caught my eye… and in these tumultuous days, when I don’t really feel like doing any trading around these short-term gyrations caused by pandemic panic and political pandering, I confess to being extra-interested in relatively stable dividend-paying investments. So let’s dig in and see what this one is, shall we?
Here’s the intro to the email I received today:
“Amazon has been one of the BEST-performing stocks during the pandemic.
“Its price has more than doubled to around $3,200, creating a massive wave of wealth for shareholders.
“Unfortunately, that price puts it out of reach of most regular investors.”
That’s not really true, though it can certainly feel that way sometimes. Many investors are still focused on the old rules that required buying 100-share “round lots” of shares through full-service brokers, but those rules have gradually disappeared over the past 20 years… and recently, fractional shares have become widely available, so most brokers these days will let you place an order for $200 worth of Amazon shares, or $20,000 worth, without worrying about exactly how many shares that is.
I’m an Amazon (AMZN) shareholder and have been gradually adding to that position, and I sometimes buy partial shares, which wasn’t really possible until a couple years ago but is a great tool for small investors, particularly in this era when stock splits have become less common and companies seem to have been taking more pride in having a $500+ share price. I still vividly remember, when my portfolio was far smaller 15 or 20 years ago, that I scraped together the capital to buy my first Berkshire B share for more than $3,000, with a single share being about what my Roth IRA annual contribution was at the time. That was a little tough to do, and I thought it was worthwhile to make that work in order to buy into Warren Buffett’s colossus, but that kind of investing is thankfully far easier now — not only did Berkshire split the shares to make their acquisition of BNSF easier, bringing the B share price down to a more accessible level in the $50-100 range, but even now, with Berkshire back well above $200, if I had only $20 to invest this week I could easily buy a tenth of a share of Berkshire through Fidelity, Robinhood or many of the other easily accessible discount brokers who offer fractional shares (almost every big broker already allows this, but I bet we’ll be able to drop that “almost” pretty soon — competition is a wonderful thing).
So whether or not you care to be an Amazon shareholder, the price per share of an investment shouldn’t mean all that much for most people these days — in almost every case, any interested investor can buy an appropriate amount of exposure to whatever stock they want (unless, of course, you’re using an options strategy — CBOE experimented with mini options that were based on 10 shares instead of 100 shares for some higher priced stocks for a while, but I’m pretty sure those have all been discontinued over the past couple years).
Sorry about that interlude, I’ll stop down off my soapbox… what else does Oxford say about this stock? More from today’s email: