AUTOHOME, Inc Message Board

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Technology Stocks : AUTOHOME, Inc

ATHM 24.95

-0.7%

Nov 4 3:59 PM EST

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To: David Harker who wrote (5537)	2/18/1999 10:38:00 PM
From: A. Robbins	Read Replies (1) of 29970

Regarding splits, by your basic econ. textbook you are correct. But let me ask you this question. How many shares of BRKA do you, or have you owned? Probably none. That money instead wound up in another stock, say Dell which in turn helped propel that stock upward. This is because as a rational man you found investing 70,000 for one share too expensive (especially if you didn't have it to begin with), and the P&L swings due to the lower liquidity of BRKA too unsettling. The same argument can be given for BRKB. I know your going to say the market will always value a stock efficiently and that it never lies ect... The truth is though that these economic principles do not reflect market psychology, which is what makes Larry the plumber down the street buy 100 shares of BROADCOM today at 60 rather than 50 shares yesterday at 120 (before split). He perceives he taking less risk and getting more value for his money. And to further my argument regarding the market efficiently valuating stocks.. look at BRCM's P/E then throw your text book out the window. Stock Splits do matter, at least for the short term, and the text book is right now being rewritten by AOL GNET AMZN ect... Anyway, Long ATHM.

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