Recently, a friend asked me why Taiwanese stocks seem so expensive, while U.S. stocks are incredibly cheap. Actually, this is a very good question, and the fundamental reason lies in the differences in trading units and calculation methods.

Let's start with the most basic concept. Stock price is the trading price of a share, representing how much money you need to buy or sell one share. Looking at stock prices is simple—just check the current market price, no need to overthink. However, there's a key point here: the definitions of "one share" are different between the U.S. and Taiwan markets.

In the U.S., the trading unit is one share. Suppose a stock's price is $100; if you want to buy, you simply buy 1 share, costing $100. But in Taiwan, there's the concept of a "lot," where 1 lot equals 1,000 shares. That’s why U.S. stocks appear cheaper.

Let me give a concrete example. Suppose a stock costs 50 New Taiwan Dollars (NTD) per share. Buying 1 lot in Taiwan would be 50 multiplied by 1,000, which is 50k NTD. The same stock in the U.S. might only cost $15 per share, so buying 1 share costs $15. Comparing these, U.S. stocks indeed look much cheaper.

Why is Taiwan designed this way? Mainly due to historical reasons. Taiwan used to implement a fixed face value system, where most companies' stock face value was 10 NTD. Over time, the trading unit of 1 lot (1,000 shares) has been retained. In contrast, the U.S. market uses 1 share as the basic trading unit, so the market threshold is much lower.

However, this also leads to a problem: ordinary retail investors often cannot afford to buy a full lot of Taiwanese stocks. For example, TSMC's stock price once reached 561 NTD; buying 1 lot would cost 561 multiplied by 1,000, which is 560k NTD. That’s too expensive for most people. So, Taiwan later introduced fractional share trading, allowing investors to buy as few as 1 share up to 999 shares, greatly lowering the entry barrier.

Back to the U.S. market. The trading unit is simply one share, regardless of its price—no "lot" concept. That’s why many people think U.S. stocks are cheap—because the starting point is indeed lower. But be aware: a low stock price doesn’t mean the stock is cheap; you also need to consider the company's overall market value and fundamentals.

There are three main factors that influence stock prices. First is the company's fundamentals, including financial health and profitability. Good performance naturally attracts investors, pushing the stock price up. Second are macroeconomic factors like GDP, interest rates, and inflation, which affect the entire market. Lastly is market sentiment—when investors are optimistic, they buy; when pessimistic, they sell. Sometimes, these emotional swings have a bigger impact than fundamentals.

So next time you look at stocks, don’t be scared off by the high prices of Taiwanese stocks. Once you understand the differences in trading units, you can better compare stocks across different markets. Although U.S. stocks may seem cheaper because of the per-share price, the overall logic is actually the same.