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I'm going to try to explain my fuzzy logic useing the reply from Bruce. Suppose I have $2,000.00 to invest and I have done some DD, now I have decided that instead of 10 shares of the $200.00 stock I will buy 5 shares and another 10 shares of copany B at $100.00 a share. I did this on my decision that I like the companies and believe in the long term they will repay my trust. Two months down the road co. A announces a split to be effective in one month. So after the split I now have 10 shares of each co. Ten years down the road co a has split 4 more times but co B never splits, so I have 10 shares of co B and 160 shares of co A (all splits were 2 to 1). Both co have had good growth but co B (Berkshire Hmmm) share price has grown to be over lets say $3,200.00 while co A has some how maintained a share value of $200.00 even after all the splits. Both companies have given me the same returns but in the real world how many new or small investers are going to look to buy shares of co B versus co A? I'm sure that there will be investors that can afford the high price of B and it is as good a return in this example as A but in this real world we are talking about high tech companies that grow and give great returns. In one of Bruces older posts he uses Cisco as an example that had returns in the 90"s of over 162,000%. I just looked at it and its price is $133.00 so obviously that returns includes many splits. Who would buy a share of Cisco at 15,000,000.00? I in no way tried to say that chaseing slits will improve my bottom line as a LTBH (maybe if I was a speculator and bought early and sold after the shares had been bid up)but if my companies do split and thereby keep the share price attractive to new investors I do profit more down the road as long as the company continues to execute and remain the dominant company I bought. I hope this has in some small way explained my reasoning.
On a personel point I felt you belittled my use of "us poor types with pitiful cash" You started you example with $5,000.00 to invest in one co. My circumstances at this point only gave me a total of $10,000.00 in my IRA to invest and I dont feel comfortable putting all the eggs in one basket so as unwise as it may sound I have purchased 3-5 share only in several companies. I may not be rich, famous or well respected, but I refuse to be belittled just because I don't have the means to buy big. On the other hand I do deserve to be flamed when I use fuzzy logic or don't support contentions I make. Thank you for your ear.
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