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No. of Recommendations: 3
Stock splits offer no meaningful benefit for shareholders. First, there is no need to buy shares in lots of 100, 500 or 1000. Second, while a share split lowers the price of a share, it also reduces the value of that share. In other words, a 2-for-1 split of a $100 share of stock results in 2 shares of $50. So if someone buys a share post-split, they are only getting $50 worth of that company. While this may increase volatility, it doesn't have any effect on the market movement of the company.

One trap many fools fall into is thinking too much about how many shares they own and not enough about the value of those shares. They think they are somehow doing better buying a lot of shares of cheaply priced stocks rather than just a few shares of more expensive companies.

But the market price of a share of stock is completely dependent on the total market value of the company divided by the number of outstanding shares. The higher the market value, the higher the stock price. The more outstanding shares, the lower the stock price. However, neither market value nor the size of the shareholder pool is a measure of performance.

Regardless of whether you own 1000 shares at $1 per share, 100 shares at $10 per share, 10 shares at $100 per share or 1 share at $1000 per share, you still own $1000 of that company, and if the share price goes up 10%, you've gained $100 any way you split it. If there's a company in which you would really like to invest but is too expensive for your available cash, just wait until you can save enough for a share.

Fuskie
Who considers share splits as investor non-events...

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Ticker Guide for The Walt Disney Company (DIS), Intuit (INTU), CME Group (CME), MongoDB (MDB), TripAdvisor (TRIP), Live Nation (LYV), Vivendi SA (VIVHY)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disclosure: May own shares of some, many or all of the companies mentioned in this post (tinyurl.com/FuskieDisclosure)
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