I've been watching a few individual stocks over the last month, such as Google, Amazon, and Starbucks.

The P/E ratio for Google is ridiculous and its share price rocketed this week from 470 to 495. I had a short sell at 475 and got out at 474 feeling like there was about to be a breakout. My bet was bad but my instinct was correct. (Keep in mind this money I'm using is fake. I don't have the guts for this kind of trading with real money.)

Amazon and Starbucks are trading in the 35-45 dolar range which is a more comfortable place for a share price to be. I'm not recommending any of these stocks; I think that buying them is much akin to gambling.

Google has so far chosen not to do a stock split (they could do a 5-for-1 to bring the share price down to 100). If I wanted to buy shares of Google with my own cash, it would seem silly to purchase 2 or 5 or 10 shares of the stock. However, if I wanted to buy shares of Amazon, I could rationally purchase an even lot of 100 shares.

Share price matters only psychologically. Whether I have 10 shares of Google or 100 shares of Starbucks doesn't matter; if both stocks appreciate 20% in value, so did my initial investment.

I suppose Google doesn't want to bother with individual investors since institutions are probably making most of the trades anyway.

My theory is that high-price single share values encourage higher volatility in a company's stock. At $500 a share, a $5 drop in share value is 1%. At $50 a share, a $5 drop in share value is 10%. However, we tend to think of 5 bucks as 5 bucks. It looks like a lot on paper regardless of share price. We want to jump in and join the excitement when it appears that numbers are moving around a lot. The volatility encourages day trading, which then encourages high trading volume. Or perhaps it is the other way around. (Chicken or egg?)

I do not recommend buying any of these highly volatile stocks unless you have a ton of money to burn without worrying about your livelihood.