Message Font: Serif | Sans-Serif
 
No. of Recommendations: 2
I don't wnat to get anybody mad, but for the life of me I see stock splits as a giant non-event. Four quarters for a dollar.

Can anyone tell me why a stock split is so great? I do not see it.

Hi Chuck,
Technically you are 100% correct, I like your four quarters for a dollar analogy.
I do believe that a split does have some level of significance however. First it implies a degree of confidence by the directors that the price of the stock, and value of the company, will continue to increase and not retreat to its' older valuation. Secondly it opens up the trading market of the stock to investors with limited funds. True 10 shares at $100 does equal 100 shares at $10 but if your investing it seems as though you have something more substantial if you have the 100 shares instead of the 10.
Psychology has an important place in the market.

Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.