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Technology Stocks : Global Crossing - GX (formerly GBLX)
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To: zebraspot who wrote (196)2/4/1999 12:10:00 PM
From: Linda Pearson  Read Replies (2) of 15615
 
zebraspot,

<Give me a ten, and I'll give you back two fives. Feel richer?
(Sorry, I couldn't resist - this split mania is getting silly)>

The fact of the matter is, you are correct. But, when a stock splits, it reduces the price of the stock, which theoretically will allow new investors who would not or could not afford to purchase a share (or shares) of the stock.

So in effect, there will be a larger potential group of investors. It is the additional investors that lend to an increase in price of the stock. If every share owner just sat with their shares, and nobody new bought the stock, there would be no increase in value.

No demand, no appreciation.

So this is what drives the interest in a stock that has announced a split. The potential of new investors...and the knowledge that others will be thinking the same way. It's a self fulfilling prophesy.

Linda

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