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Technology Stocks : America On-Line: will it survive ...?
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To: Bald Man from Mars who wrote (8149)2/23/1998 6:24:00 PM
From: Pancho Villa   of 13594
 
>>on the day it split they open
up 4 points, and I think that is obscene, knowing a lot
of people might be interested in buying MSFT after it splits.
Would the same thing happen to AOL ???<<

No written rule. IMO AOL's split is dangerous for both shorts as well as longs. For example, you may go long thinking the split is a fool proof way of making money to then see the stock tank (look at NVLS and its latest split). For the shorts, there is also a danger of seeing what we did with MSFT.

Also, keep in mind that redardless of what you hear, this market is very risky and one more reason AOL may go down despite the split is that it may go down with all the boats.

Lastly Cramer has an empirical piece in support of splits (a traders view of course).

thestreet.com

a taste:

Here's an article that will have the Harvard Business School calling for my head: Splits are great. They create wealth. Instant wealth. Oh, I hear the groans on the Charles. Instead of one share at 100 you are getting two shares at $50. What's the big deal? That's just marketing, I am sure they would be saying if they had the Net up there.

And they would be exactly right. I remember when the Trading Goddess first had a fight with me about splits when I left Goldman Sachs and she had been trading for seven years already. I was giving her the party line about how splits are a joke, they mean nothing. And she told me that if that was my attitude I should hang 'em up because I knew little about what moves a stock higher. Splits, she would say, are the greatest marketing devices ever invented. They create good feeling among shareholders at no cost whatsoever to management. They are nothing but Net.
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