Irrationality of the Stock Split Rally

Splits don’t change anything. Yes, you will have 4 times more but each is worth 1/4, so it’s exactly the same.

Sure, it encourages people who felt it was out of reach to get in, so it brings in some new money. And it creates media attention. It alters the price-weighted DJIA. And investors can more easily buy blocks of 100 shares, putting covered option strategies in reach for more people. And it changes the range of strikes available on the options chain. But other than that and anything else I haven’t thought of, it does NOTHING!

Published by Brian

Grappling sometimes, but mostly just trying to get others to grapple.

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