From: BreadWithSpam@fractious.net
Newsgroups: misc.invest.financial-plan
Subject: Re: Stock Split first timer.  What do I look for....
Date: Fri, 4 May 2007 19:48:18 -0500
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	A+eqtXWp5o/LAAwDV/u6EHo7F8/doGMH18n6Cqa/w/5X1UuG+dvUjQ==
	=tDXu

"The Henchman"  writes:

> Potash announced a 3-1 spilt to be done later on in May.  Quite
> frankly Cdn large caps are expensive anyway so I understand the
> mechanics of the 3-1 to entice more buyers.  They are increasing

Splitting a stock doesn't make it cheaper.  It makes the per-share
price lower, but the financials - the price/earnings ratio, etc
all stay precisely the same.  If it was expensive (ie. overpriced)
before, it's just as overpriced afterwards.

There's very little reason for stocks to split these days.

(Even Washington Post, currently going for $766/share is
not really priced yet such that a small-scale investor
couldn't buy in.  The smallest investment would be $766,
but anything smaller than that and the transaction costs
eat you alive anyway).

> I am asking for other's experience from DIY investors what
> historically they found during a stock spilt of this order.  What
> can I expect to the value of my 63 shares from a historical
> perspective say 6 months down the road.  I'm asking for historical

Economically, nothing whatsoever.  Financially, it's totally
a non-event.

Practically, however, there have been some studies which
show some short-term movement which relates to splits,
but it's only a short-term thing and, frankly, not very
important.

Do a google search on "stock split price movement".

> I had been debating about selling when it was $214 and using my
> gains to start an ETF portfolio then I read the news of this spilt.

You might as well ignore the split and, if you were planning
on rebalancing, go ahead and do it.

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