SAP A.G. Message Board - Msg: 5390358

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Technology Stocks : SAP A.G.

SAP 240.02

+0.9%

Nov 26 3:59 PM EST

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To: Jim Baker who wrote (1948)	8/2/1998 7:47:00 PM
From: mauser96	Read Replies (1) of 3424

Is liquidity for the big investors a matter of the number of shares, or the dollar value of the shares outstanding? I suggest that it is the latter. Putting 2 or 3 million dollars into a $30 stock with 10 million shares available will result in the same effect as if the money had gone into a $15 stock with 20 million shares available. Low liquidity means big investors drive up the price as they buy, and drive it down as they sell. This happens to some extent in even the most liquid stocks, and is one of the main reasons why active mutual fund managers usually do worse than index funds. Stock splits in situations with limited shares outstanding might add to the attractiveness for small, less sophisticated investors. Certainly stock splits usually help the price, even though it doesn't alter the earnings.

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