Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Ryan Bartholomew who wrote (170695)	6/9/2014 7:00:13 PM
From: pyslent	1 Recommendation Recommended By HerbVic Read Replies (1) \| Respond to of 213173

You can't take the pool of splitting companies and use it to predict what impact the split itself will have post-announcement. It's impossible to extract the impact out wholly, so it's best to look at it logically. You are tying to prove causation and finding it impossible. What you fail to understand is that all that matters is to prove correlation, and that, you can prove by the manner above.

To: Ryan Bartholomew who wrote (170695)	6/9/2014 11:21:50 PM
From: HerbVic	2 Recommendations Recommended By Stock Puppy Zen Dollar Round Read Replies (1) \| Respond to of 213173

Of course - companies that split generally do so because their share price has increased markedly. … I see you are a literalist. Let me see if I can give you a literal interpretation. The market, along with the rest of the world, is a chaotic web of causal links. Appreciation (pre decision to split) in share price is not that much a factor in the decision to split a stock. There are many reasons to do so. AAPL has been higher than $700, but April 23, 2014 is the day they chose to announce a 7:1 split. That day, it closed at $524.75. So, to say that companies generally do so (split their stock) because their share price has increased is misleading if not outright faulty logic. Companies generally split their stock when it is above $100 a share and the management's expectation is for further sustainable appreciation, as well as other factors. That means that post 'split announcement' profits can be anticipated and acted on in a timely manner. In this case, the announcement was after the bell and the stock opened higher the next day. So, buying post announcement does sacrifice some of the capital gains, but there was (and usually is) still plenty of room to run. The market is inefficient. One way to capitalize on market moves is to recognize pricing displacement and invest to participate in its correction. The point in time where a split in a popular stock becomes known is by its very nature a disruption to pricing efficiency.

To: Ryan Bartholomew who wrote (170695)	6/10/2014 12:04:21 AM
From: i-node	Read Replies (1) \| Respond to of 213173

>> If AAPL runs to $100 in short order, it has nothing to do with the split per se. I would drop the "per-se". It has nothing to do with it, period. Is there even one person on this thread who has argued that it is anything other than cutting the pie into more pieces or changing a 10 for ten ones? It is an absurd argument. Even 30 years ago it was; today, the only real impediment to the absurdity was the cost of broker's fees -- now, even THAT is gone. It doesn't alter the fundamentals of the stock in any way, at all. I've never bought a stock in my life without first knowing the number of outstanding shares. It is the first thing I look at after the share price. Who doesn't do that? Okay, there are "traders" who look to make money tiny amounts of money on in-out trades that don't amount to a hill of beans. There are "technical" traders, who are misled by the premise that everyone knows everything. Substantial buyers and sellers, the ones who make the shares move, recognize a split doesn't mean a damned thing. They're looking at earnings. This idea that a stock split is going add meaningful value to the share price is total nonsense. 30 days from now no one is going to say, "Why don't I buy some Apple because I can buy smaller shares for a proportionately smaller price?"