Falling stocks with a small investment question

Sorry for my super noob question, just trying to check my understanding.

If I make a small, but long term investment in a stock at a certain level, and that stock falls down by the amount that I invested, that means that the whole investment has been lost. Is that correct?

For example: If I buy a fraction £100 worth of NVIDIA Corporation shares at £500 and the the value of NVDA falls to £400 per share, then I would lose the £100 fraction investment? If this is correct, then assuming that it falls to £450, but then raises up to £550, how does that reflect with my fraction investment of £100?

If you buy a fraction, you get a fraction. £100 into Nvidia at £500 a share means you own 1/5 (0.2) of a share.

Your exposure to changes in the share price are both multiplied by 0.2, positive or negative.

So Nvidia rising to £550 would be £50 * 0.2 profit, £10 gain.
Equally, a drop to £450 would be -£50 * 0.2, -£10.

2 Likes

@simonpoole you beat me to it :smiley:

The key thing is you’re buying a portion of a ‘thing’, in this case a share of a business. The value of that may change, but the amount of the share or shares you own doesn’t change. You always own 1/5th of a share (unless the business goes bust)

I see! Thank you very much!