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Technology Stocks : Lucent Technologies (LU) -- Ignore unavailable to you. Want to Upgrade?

To: LWolf who wrote (1552)	3/10/1998 1:03:00 AM
From: tiquer	Respond to of 21876

Is this purely psychological? Yes.. purely psychological. The reason these "movers" have gone up in price "rapidly" is because their earnings per share (eps) have gone up "rapidly"... When folks buy stocks that split again and again, doesn't their average costs go down. No.. 100shr @10 =$1000... 200shr @5 =$1000.. Your original cost never could change... When one sells those shares one uses the original cost (basis) from the conformation slip received? The more and longer you think about this the more it will make sense Roger

To: LWolf who wrote (1552)	3/10/1998 7:50:00 AM
From: Rob L.	Read Replies (1) \| Respond to of 21876

Laura, IMO, it is purely psychological. Fast mover or slow mover it does not matter. In your example, a move from 54 to 69 is the same as a move from 108 to 138. So you make the same amount of money even though you have less shares at 108. No additional value is created. Do the math: 100 shares at 108 = 10800 100 shares at 138 = 13800 200 shares at 54 = 10800 200 shares at 69 = 13800 If the stocks continually rise and split time after time, then you wold be averaging up, not down. You are continually buying at higher and higher prices, raising your average purchase price, not lowering it. The only reason you would end up with more value is because the share price keeps rising, not because you are buying a stock that splits all the time. Let's say for theoretical purposes that LU decides to split again when it splits to 54 (it never happens, but let's say it does for arguement's sake). That would put the price at 27. Is there any more value created? No. You just have more shares at a lower price.