The Motley Fool: Every Sunday, useful tips on investing
Buying a few shares; why Warren Buffett matters; taking stock of Google
Ask the Fool
Q: Can I buy fewer than 100 shares of stock in a company?
A: Yes, indeed. You can usually buy as little as one share at a time. But be sure to pay attention to the commissions you pay your brokerage -- if you buy one $45 share of stock and pay a $15 commission, you're out 33 percent from the get-go. It's sometimes best to accumulate cash and buy a bigger stake, later.
If you're buying stock directly from a company, such as through a dividend reinvestment plan (a "Drip"), your money can buy fractions of shares at a time. For example, a $30 contribution would buy you half a share of a $60 stock. Learn more about Drips at dripinvesting.org and dripinvestor.com.
Why Warren Buffett matters
Warren Buffett's name is familiar, as one of the world's richest people. Learn more about him, and you may be inspired.
His wealth is not inherited. Hailing from Omaha, Neb., Buffett was fascinated by the stock market from childhood. He bought his first shares of stock at the age of 11, making mistakes and losing some money along the way, as every investor does.
But he kept learning and applying what he learned.
He had $9,000 in the bank when he graduated from high school. (Adjusted for inflation, that's more than $85,000 in today's dollars. A key lesson here is that starting early is powerful.)
Today Buffett heads up Berkshire Hathaway, a company he built with his partner, Charlie Munger. It has made many investors rich, and it is actually a collection of many companies that Buffett bought in their entirety, such as Dairy Queen, GEICO, Fruit of the Loom, Benjamin Moore, See's Candies, NetJets, The Pampered Chef and the huge BNSF railroad. He also owns big chunks of stock in some other companies.
How has Buffett done? Well, remember that historically, the stock market has grown by about 10 percent per year, on average.
Meanwhile, Buffett's company has averaged more than 20 percent per year since 1965, and is now worth more than $200 billion.
Warren Buffett is not just a great investor, but also a great teacher, offering advice on how to be sensible about investing. Learn from his many educational (and entertaining) annual letters to shareholders at berkshirehathaway.com, and read about his amazing life and achievements in Roger Lowenstein's terrific biography, "Buffett: The Making of an American Capitalist" (Random House, $19).
My Dumbest Investment
Invest, don't gamble
Dear Fool: Years ago, I watched Sun Microsystems' stock price fall to $12 per share, and then $9. I bought a lot of shares. When it rebounded to $12, I felt like I'd really made a score! But weeks later, it sank quickly to $5 and then to $3.25.
I sat with my $9 shares under water for a long time. I played my cards and lost. I'm now more cautious about buying something that I swear "can't go any lower." Now even shares at $2 or $3 I get nervous about.
The Fool responds: First off, be careful if you're thinking about investing in gambling terms, such as playing cards. Many do speculate wildly in the market, but successful stock investors often see themselves as part-owners of carefully selected businesses, aiming to hold on for years.
And as you learned, even seemingly very low prices can keep falling. You need to read up on the situation and see how likely a recovery is.
The Motley Fool take
Google: No one-hit wonder
Google (Nasdaq: GOOG) built its dominance on search, delivering relevant information to those who seek it. It monetizes this through advertising, which remains 96 percent of its revenue today.
Given Google's failure to turn Gmail, YouTube or Android into cash cows, some wonder whether it will ever branch out beyond search-based products. It might not have to, though, since its position as the gatekeeper between a user and information gives it significant value, power and advantage over competitors.
Google has seen many successes. Gmail claims 425 million users, compared to Microsoft's Hotmail at 325 million. Google's Chrome browser went from 0 percent market share in 2008, to having a little more than 33 percent. Microsoft's Internet Explorer comes in a close second at a little under 33 percent.
Eventually, some of Google's new products will turn into moneymakers. In the meantime, via acquisitions, Google can bank on the ideas of others that were developed outside the company. It has acquired 60 companies since the start of 2010, including Motorola Mobility, which can help it expand in the hardware realm.
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