>>> in 1999 QCOM went up 26-fold-- <<<
That was my point. Splits are great for growth stocks in times where the growth stocks are in a strong uptrend. Otherwise, they slow down price movement from a supply vs. demand scenario. If there are more shares available, it takes more demand to offset supply.
Most people, not all, buy shares based on round numbers, 100, 500, 1000, 5000 etc. They don't normally buy shares based on a percentage of their portfolio. If you buy shares based on a percentage of your portfolio, say 10% for example, then the number of shares are irrelevant because you are investing a dollar amount. This is how I buy shares. I invest dollar amounts, even if it ends up buying odd lots.
Most people will buy, for example, 500 share lots. 500 shares of X at 10.00, 500 shares of Y at $15.00, 500 shares of Z at $20.00 and then you are overweighted Z based on dollar investment and if you lose on Z you could offset gains from X and Y. That's why it's usually best to buy dollar amounts based on the amount of your portfolio you wish to risk on each trade.
Since a lot of people buy based on share lots, it's the dilution, or extra shares available due to a split that slows down price movement, unless it is a growth stock in a growth stock environment.
I could be wrong, but that's the way I recall having read the research. I wish I could remember where I read it. I would like to go back and confirm it. |
