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Hateyou

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I’ve never had stock during a split. Does it divide your cost basis by the split amount? Four in Apples case, so my cost basis would be $260/4?

So instead of 7.5 shares at $400 with a cost basis of $260 I would have 30 shares at $~100 with a cost basis of $65?
 

Sanrith Descartes

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I’ve never had stock during a split. Does it divide your cost basis by the split amount? Four in Apples case, so my cost basis would be $260/4?

So instead of 7.5 shares at $400 with a cost basis of $260 I would have 30 shares at $~100 with a cost basis of $65?
Cost basis remains the same but cost per share changes. So cost basis is still $1950 (7.5 x 260) but now cost per share drops from $260 to $65. So now you have 30 shares at $65 and your cost basis is still $1950.
 
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TJT

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With the AAPL 4:1 split coming is it wise consider loading up on shares before the split or after? I mean, probably doesn't really matter in the long run but I never personally considered the advantages of being in on a split or just buying the result.
 

Sanrith Descartes

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With the AAPL 4:1 split coming is it wise consider loading up on shares before the split or after? I mean, probably doesn't really matter in the long run but I never personally considered the advantages of being in on a split or just buying the result.
Historically what generally happens is there is a run up in price to the split date and then a dip after the split occurs. Remember your basis doesn't change so let's say it shoots to $420 pre-split, you are still paying $420 a share for AAPL. The fact that after the split you own 4 shares valued at $105 is the same thing.

Something to keep in mind, in the modern world you can buy fractional shares which didn't use to be the case. So lowering the price doesn't make the stock more affordable to the poors. In reality with today's market it will probably shoot to 200 the day after the split. Today's market is bonkers.
 
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TJT

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That could certainly translate to a short term gain. But it sounds like this wouldn't hold true in the long run? I've been holding all my AAPL shares a long time with no intention of selling them. In that way I guess it doesn't matter.

I might as well buy a few more now.
 

Hateyou

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That could certainly translate to a short term gain. But it sounds like this wouldn't hold true in the long run? I've been holding all my AAPL shares a long time with no intention of selling them. In that way I guess it doesn't matter.

I might as well buy a few more now.

I don’t think it will hurt to buy some even now. Once it splits people are going to look at it like it’s “more affordable” even though it’s the same price. I’m guessing it’ll run up after the split, but I suck at this so I may be wrong.
 
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Sanrith Descartes

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AAPL needs to be looked at outside the lens of the split. End of close it was trading at a PE of 30.16 (or 30x earnings). Look at this YTD chart. See where AAPL was trading pre-Coronachan ($320 - $330) range. I added and highlighted a line at $412.16 which is the estimated pre-market open for AAPL. There might be some consideration to waiting until after a split and see if the price settles downwards from there. We are talking a split adjusted price of about $96.19 a share. Now if between now and the split date AAPL gets hit with any type of serious pullback then that changes the calculus a bit. If you weren't buying it yesterday at $384 a share, are you going to buy it today at $412 a share?

edit: I do own some. I don't think I personally will be chasing the split unless I see some compelling reason to.

edit 2: here is alink with some info on splits. Research tends to show that prices do increase over the long term after a split.

"Price Performance

Although stock splits have no affect on the intrinsic value of the stock, being basically cosmetic, many studies show that stock splits result in high performance. In two separate studies in1996 and in 2003, David Ikenberry, Chairman of the Finance Department at the University of Illinois at Urbana-Champaign, found price performance of split stocks outperformed the market by 8 percent during the year following the split and by 12 percent over the ensuing three years. He looked at over 1,000 stocks for each study, including 2-for-1, 3-for-1 and 4-for-1 stock splits."




1596198806211.png
 
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Sanrith Descartes

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CVX has worst quarterly loss in history. XOM misses expectations. Both getting pummeled. Getting stopped out of my XOM and eating the loss was the best trade I made this year I think.
 
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Locnar

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I've heard from a lot of casual investor friends say certain stocks are "too expensive" and only going by the stock price not relative to anything. So I think apple splitting will suddenly make it "more of a good deal" to these people.
 

Comrade Araysar

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I've heard from a lot of casual investor friends say certain stocks are "too expensive" and only going by the stock price not relative to anything. So I think apple splitting will suddenly make it "more of a good deal" to these people.

I think theres a lot of truth to this, I'd certainly expect the stock to get a boost after the split now that the shares are "more affordable"
 
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Comrade Araysar

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Amazon now has multiple price targets of $4,000, at $3180 right now

There was a decent boost in post market trading yesterday when the Q2 earnings were announced but they have mostly evaporated by now and now its stalling this morning. DOnt really understand it. Lots of upside, great earnings report, lots of expansion opportunities, etc.

1596204999844.png
 

Hateyou

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Amazon now has multiple price targets of $4,000, at $3180 right now

There was a decent boost in post market trading yesterday when the Q2 earnings were announced but they have mostly evaporated by now and now its stalling this morning. DOnt really understand it. Lots of upside, great earnings report, lots of expansion opportunities, etc.

View attachment 289291

It’s “too expensive” for people to buy!

I honestly expected amazon to do stock splits when they were in the $2k range and I’m not sure why they don’t. I know it’s cosmetic but like we just discussed, it changes people’s perspective on how affordable it is to buy in.
 
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Sanrith Descartes

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GOOG is very quietly down over 4%. Anti-trust headwinds and a 2.6 billion drop in ad revenue will do that to you. It bounced right off the 50 DMA support level of 1465. if it retests and fails the next stop is support at $1446

Edit: $1446 is the 40 day support level.
 

TJT

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I've heard from a lot of casual investor friends say certain stocks are "too expensive" and only going by the stock price not relative to anything. So I think apple splitting will suddenly make it "more of a good deal" to these people.

Despite how illogical it appears with further analysis or understanding it makes sense when you look at it at the perspective of available funds. If I am a casual investor with $1000 on hand at any given time to buy stonks spending my entire cash position to buy 1 or 2 stonks can be considered bad. Even if in hindsight the purchase was good and you make a good return on those two stonks.

Because by doing this you now do not have the resources to buy into other appealing positions that you come across. It's the same reason penny stocks are awesome when you have nothing but when you have enough to not even look at them then well, you just stop considering them.

Take Araysar Araysar and his 3 AMZN position. He spent ~$9k on that. While it will absolutely be an excellent choice in the long term most casual/average level investors don't have that kind of cash on hand that they're willing to throw down at any given time. Or doing so is just a big decision about their financial future and not nearly as impactful as buying $500 of something more, "affordable."

I almost exclusively talk about my fun trading account I started in 2013 when I got my first job out of the Army. In 2008-2013 I made a relative killing through sheer idiocy by dumping my deployment money into the market on an account my dad made for me. In 2013 I started with $10k in a fun account and in 2020 that is now a six-figure account. And I did exactly what you're talking about. I started out making small buys here and there and as that account grew and I had more cash available to put in it the things that looked more affordable to me increased in price. Kind of rambling but it makes sense to me.

The key to successful investing is consistency IMO.
 
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Sanrith Descartes

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Despite how illogical it appears with further analysis or understanding it makes sense when you look at it at the perspective of available funds. If I am a casual investor with $1000 on hand at any given time to buy stonks spending my entire cash position to buy 1 or 2 stonks can be considered bad. Even if in hindsight the purchase was good and you make a good return on those two stonks.

Because by doing this you now do not have the resources to buy into other appealing positions that you come across. It's the same reason penny stocks are awesome when you have nothing but when you have enough to not even look at them then well, you just stop considering them.

Take Araysar Araysar and his 3 AMZN position. He spent ~$9k on that. While it will absolutely be an excellent choice in the long term most casual/average level investors don't have that kind of cash on hand that they're willing to throw down at any given time. Or doing so is just a big decision about their financial future and not nearly as impactful as buying $500 of something more, "affordable."

I almost exclusively talk about my fun trading account I started in 2013 when I got my first job out of the Army. In 2008-2013 I made a relative killing through sheer idiocy by dumping my deployment money into the market on an account my dad made for me. In 2013 I started with $10k in a fun account and in 2020 that is now a six-figure account. And I did exactly what you're talking about. I started out making small buys here and there and as that account grew and I had more cash available to put in it the things that looked more affordable to me increased in price. Kind of rambling but it makes sense to me.

The key to successful investing is consistency IMO.
I agree. Investors have been programmed from day 1 that you buy shares. A shift needs to occur to fractional investing as the basis. Lets use the AMZN example. If I were in the mindest to buy AMZN I would do it at a strict dollar amount, not a share amount. Lets say you have 10k in a fun account but want to keep some measure of diversity and not invest more than say 10% in any one stock, I would just purchase $1000 of AMZN. Not all platforms allow this and it need to change so its available to everyone. With Fidelity I can choose to purchase via shares, fractions of shares or just a dollar amount of the stock. I still have to stop myself sometimes in terms of automatically thinking in terms of 100 share transactions. It really is reprogramming my thought processes.
 

Comrade Araysar

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To add to that, I never think about shares in terms of Individual prices, only how much money I want to invest ( i.e. Sanrith's "I want to invest $1000 into AMZN" example) and then do the math to figure out how many shares that is.

I also never look at stock price changes in terms of dollars, strictly in terms of percentages. I couldn't tell you on any given day how much AMZN stock went up or down despite holding a $9500 position in it, but I can tell you the exact percentage from the day I bought into the position or the current intraday changes.

This essentially makes the stock price meaningless to me because I'm either buying 4500 shares of Kodak at $2, or 3 shares of amazon at $3k and then looking at percentage increases. The quantity and price of stock is rendered pointless then, all that matters is the total value of the position.

P.s. I definitely think that splits add a boost to stock price just from a psychological and affordability stand point.
 
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LachiusTZ

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I'll admit I'm guilty of that.

Between the cost per share, and not getting in early, it becomes hard for me personally to buy into things like Amazon

Even tho I know it's likely a great investment
 
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Furry

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I wonder what the california Patreon arbitration decision's effect on google is. I've been expecting angles of attack to open up based on their active moderation of content having its good faith questioned. Those two companies are in a similar enough position that I'm sure its something that google's lawyers are looking into. Might be why there's some pullback today.