What if all stocks just split?
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  What if all stocks just split?
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Author Topic: What if all stocks just split?  (Read 1021 times)
King
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« on: June 10, 2008, 01:04:09 PM »

Let's say that Congress passed a bill that mandated a one time stock split of all companies being traded on the NYSE.  Would that help or hurt the market?  The total value of the stocks would stay the same, but the the price per share would be diluted due to the increased volume.

I think it might be able to give the economy a short boost if it were to happen.  Maybe not to all stocks as the penny stocks would probably suffer a bit from $.75 share prices.  A split based on value might work like this though:

$0-49.99: No split
$50-99.99: 2-to-1
$100-199.99: 3-to-1
$200-299.99: 4-to-1
$300-399.99: 5-to-1
etc, etc

How would this help the market?  It could get a lot of small money investors who normally chase after lower valued stock might be encouraged to buy in larger companies if they see the lower prices.  15 shares of Apple, Inc. at $62 a share sounds a lot better than 5 shares of Apple, Inc. $186 a share.  10 of ExxonMobil at $44 might sell more than 5 of ExxonMobil at $88.  It could also get more big investment firms to buy a lot more of companies they like at the lower prices, too.  A run on the market could really help the economy.

I don't know that much about the stock market.  So, maybe an "economist" on this board can enlighten me.
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dead0man
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« Reply #1 on: June 10, 2008, 01:09:58 PM »

I would assume nothing major would happen.  The market doesn't change because some dude in Peoria is concerned that Apple is to much per share at $168.  The dudes that move the market know 1 at 168 is the same as 2 and 84.

But I don't know much about it either.
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True Federalist (진정한 연방 주의자)
Ernest
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« Reply #2 on: June 10, 2008, 03:19:46 PM »

The reason stocks are split (or do a reverse split) is to keep the price within a desired range.  Since a multiple of 100 shares is the usual size of a sale, if a stock is too pricey, it may deter individual investors from buying it and thus depress the value of the stock.  Conversely, if the stock is too cheap, it will get delisted from major stock exchanges.  Such a forced split as CF proposed would essentially hurt smaller valued stocks slightly and help larger valued stocks slightly.  However, smaller valued stocks increase stock churn and with more shareholders, increase costs for shareholder communications.  A few companies spurn stock splits for that reason, the most famous being Warren Buffett's Berkshire Hathaway, which has a share price of over $100,000. As a result is sold on the NYSE as single shares rather than the more usual 100 share lots.
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snowguy716
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« Reply #3 on: June 10, 2008, 05:54:47 PM »

It's the same as when you go to Target and you see "4/$1!!!!!!!!!!!!!!!!!!!!!"

I think "but I only want one, and that'll be $.25.  Yay."

Except those crap stores that pull the whole "2 for $20 or 1 for $14.95"... you know.. that price range wher you think it's too expensive for 1, but you don't want two... so you just skip over the item completely...  I hate dynamic POS software.
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Хahar 🤔
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« Reply #4 on: June 10, 2008, 10:47:59 PM »

It's the same as when you go to Target and you see "4/$1!!!!!!!!!!!!!!!!!!!!!"

I think "but I only want one, and that'll be $.25.  Yay."

Except those crap stores that pull the whole "2 for $20 or 1 for $14.95"... you know.. that price range wher you think it's too expensive for 1, but you don't want two... so you just skip over the item completely...  I hate dynamic POS software.

I agree completely.
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