Expert: Steve Hach - 1/5/2009

Question
Hello,

I have currently start a busiess with out investing even a piny in it. i'll tell how.

I am from afghanistan.
I said to my friend that i have some one who sells Cement, if we start it what will be your opinion about it. he said this is wonderful, so i talk to the seller and we agreed at a fix price agreed by both of the parties.

I said to me friend that i am not going to invest in it but if we deal this i will have 40% of the profit when we sell it in Afghanistan so he agreed and i also have my commission from the seller side.

Now i have got $500 from the profit and $112 from the seller side with the total of $612 with our even investing a Cent.

i will run this busiess in partnership with my friend for as long as possible but next time i am going to invest in it.
we will make a joint partnership Company.

Now i also like to start investment in stocks and mutul funds.
for example i will but 10 share of BRK.B at $3343/share which will make a total of $33430.
how will i get my profit and in how long.
if the Company from which i have bought shares make profit and if the Company makes loses then what will happen, for example a week after the price of each share drops to 3043/share what will happen if i keep the share and wait in hope that prices will rise,
If the price is rised to 3540 per share how will be paid.

I hope you would have understood my question.

Regards
Mansoor  

Answer
Mansoor,

Thank you for your question.

I wish you the best of luck with your cement business and I sincerely hope that things will get better in your country soon.

If you buy BRK.B you will not realize any profit or loss until you sell the stock.  You may receive dividends if the stock pays dividends.  Some people buy stocks that pay dividends and then just rely on those payments without ever selling the underlying stock.

The price may rise or fall depending on how many other people buy the shares and whether or not the underlying investments by Berkshire gain or lose money.

It is impossible to predict when the price will increase or decrease.  You may NEVER get a profit!

If the share price declines after you buy it you can wait to sell in the hope that the price increases and you get all your money back.

If the share price increases after you buy it you do NOT make a profit unless you sell the shares.

I recommend that you get a copy of a basic book for understanding the stock market such as "Investing for Dummies."  You might also consider using wikipedia to research stock market investing.

Salam!

Steve