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Technology Stocks : AUTOHOME, Inc
ATHM 24.95-0.7%3:59 PM EST
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To: A. Robbins who wrote (5556)2/19/1999 12:48:00 AM
From: ahhaha  Read Replies (2) of 29970
 
When they are reverse splitting, it is because the shares have dropped into the cats and dogs category, and the company is looking for some respectability. By that time you should probably just hold as long as the circumstance is not so bad as to threaten bankruptcy.

You said splitting is a psychological phenomenon which is true. The question is what kind of psychology? Is it a manipulation by the company to entice people to buy what they naively thought was beyond their reach? Is it a ploy to prey on the self delusion people engage about buying anything that has gotten cheaper? We all know how much more we unnecessarily buy at the supermarket when prices fall, so it follows that a similar tack can be applied to hoodwink people into buying stock that they don't need. Maybe it is what CFOs claim: a way to increase stock liquidity, but that is fiduciary rather than psychological.

In all psychological cases it is a manipulation and shouldn't be trusted. Thus you are unwise to buy on split alone, unless, of course, it is a reverse split. Split psychology to buy is rife at the top and is one of the favorites of the public. During the late '20s it was a favorite too. Later, many journalists decried public stupidity for buying on split. Guess those journalists views are no longer operational. Truth is relative and you are free to choose which ones you wish to believe, right?
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