Apple Announces Stock Split

[MacRumors]

Apple announced (http://biz.yahoo.com/prnews/050211/sff013_1.html) today that their Board of Directors has approved a 2 for 1 stock split, increasing the number of common shares from 900 million to 1.8 billion.

Each shareholder of record at the close of business on February 18, 2005 will receive one additional share for every outstanding share held on the record date, and trading will begin on a split-adjusted basis on February 28, 2005.

A stock split (http://www.sec.gov/answers/stocksplit.htm) simply decreases the cost of purchase of each share while proportionally increasing the number of shares available. This does not change the value of the stock owned by current shareholders.

[technocoy]

seems like everyday brings more good news for my favorite company!

technocoy

[Sharewaredemon]

Great news, my dad will sure be happy.

[Les Kern]

I bought at 12, sold at 35. What an idiot.

[Bigheadache]

Hmmm, not sure why you guys think this is good news. Stock splits don't mean anything.

[arn]

Hmmm, not sure why you guys think this is good news. Stock splits don't mean anything.

I think it's generally seen as a positive sign about prospects for the company.... but yes, at face value, it doesn't mean much.

arn

[ac2102]

What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102

[virus1]

Beautiful! This means apple anticipates thier growing just as much as we do. Wonder how the market will react, if at all.

[Bigheadache]

What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102

There is no real effect. Occasionally you get a bit of exuberance (a bit like what we see in this thread already) and the price spikes, but afterwards it should settle down as rational investors realise its a non-event. If you are interested, look up 'Miller and Modigliani'

[KindredMAC]

need to buy more.......

[deputy_doofy]

Doofy now wishes he had more than 10 shares. Though, Doofy did buy those 10 shares at $19 and change. So, Doofy made a small profit (well, if I sell).
Maybe I'll buy some more after the split...

[sinisterdesign]

What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102

since i'm no finance whiz, i'll let Investopedia.com explain:

"A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their industry. The primary motive is to make shares seem to be more affordable to small investors even though the underlying value of the company has not changed.

A stock split usually results in a share price increase since many small investors think that the stock is more affordable and buy the stock. Another reason for the price increase is that a stock split provides a signal to the market that the company's share price has been increasing and people assume that this growth will continue in the future."

[Avicdar]

Hmmm, not sure why you guys think this is good news. Stock splits don't mean anything.

Not so.

When a company splits its stock, the newly priced stock becomes more attractive to a wider range of market investors. It also introduces a bit of a momentum potential to the stock. (i.e. a stock priced at 70 dollars may be seen as maximum value for the stock, but reduce that to 35 dollars and it is judged as having room left to grow).

Of course, the doubling of the available shares does in reality cancel out this effect from a market capitalization point of view, but not everyone pays attention to that.

Apple is likely betting that the split will encourage more people to buy and give the stock another run.

[FriarTuck]

1999 called. It wants its bubble back.

[Bigheadache]

Not so.

When a company splits its stock, the newly priced stock becomes more attractive to a wider range of market investors. It also introduces a bit of a momentum potential to the stock. (i.e. a stock priced at 70 dollars may be seen as maximum value for the stock, but reduce that to 35 dollars and it is judged as having room left to grow).

Of course, the doubling of the available shares does in reality cancel out this effect from a market capitalization point of view, but not everyone pays attention to that.

Apple is likely betting that the split will encourage more people to buy and give the stock another run.

You mean it seems more attractive for moms and pops. For instos and pension funds (basically the investors that count), it means nothing. Analysts are still only interested in earnings, a stock split does nothing for that.

[Bigheadache]

1999 called. It wants its bubble back.

Hey man that's harsh!! P/Es aren't that high yet

[machowiak]

What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102

Whoever wrote the article for MacRumors.com was wrong by saying that it does absolutely nothing for the value of the stock. In *theory* it shouldn't do anything, but nothing in life ever works like it should on paper.

The reason companies split a stock is because sometimes a stock will become too expensive for the average investor to purchase. Since the average investor knows less about what stocks should be valued at than the pundits, they will inflate the price of the stock. For example: Let's say you have a stock that's valued at $100. Some brokers have minimums that you can buy when you place a purchase order for a stock. Often times it can be as high as 10,000 shares. So, if you have to purchase 10,000 shares at $100, we're talking about $1,000,000. If you split the stock, many more people will be able to buy 10,000 shares for $500,000 than for $1,000,000. Thus, the higher the demand, the higher the stock price will go (basic economic theory). As a result, you could have a pre-split price of $100 but you could have a post-split price of, say, $60. Two shares at $60 = $120. Thus, Apple is increasing the stock price by really doing very little.

The whole point of a publicly traded company is to increase the value of its stock. Stock splits are the quickest and least time consuming way to do this.

[Bigheadache]

Whoever wrote the article for MacRumors.com was wrong by saying that it does absolutely nothing for the value of the stock. In *theory* it shouldn't do anything, but nothing in life ever works like it should on paper.

The reason companies split a stock is because sometimes a stock will become too expensive for the average investor to purchase. Since the average investor knows less about what stocks should be valued at than the pundits, they will inflate the price of the stock. For example: Let's say you have a stock that's valued at $100. Some brokers have minimums that you can buy when you place a purchase order for a stock. Often times it can be as high as 10,000 shares. So, if you have to purchase 10,000 shares at $100, we're talking about $1,000,000. If you split the stock, many more people will be able to buy 10,000 shares for $500,000 than for $1,000,000. Thus, the higher the demand, the higher the stock price will go (basic economic theory). As a result, you could have a pre-split price of $100 but you could have a post-split price of, say, $60. Two shares at $60 = $120. Thus, Apple is increasing the stock price by really doing very little.

The whole point of a publicly traded company is to increase the value of its stock. Stock splits are the quickest and least time consuming way to do this.

the flaw in your statement is that professionals, instos, and pension funds make up the big portion of investors and they see through this, plus they aren't impacted by minimum parcel sizes. As a result, the window where prices spike is very small. If there is a gain, you can bet it will be arbitraged out.

[Mantat]

Guys, the real reason for stock split is to increase trade volume. Because the more volume there is, the easier it is to sell/buy the stock and it increase speculation which in turn can increase the stock price on the short run.

Basicaly, its a bad thing for long term investor but doesnt change anything for everyone else.

I think Apple did this because they want to increase stock volume to create a momentum because at the recent price increase.

But seeing how many of the financialy illiterate people there are in the world, I guess it was a good move by apple to do so...

[Platform]

Many people I know regret not buying apple stocks before they went up :(
Should have done too, or is it still going to go (I think so/look's that way :rolleyes: )

[Avicdar]

You mean it seems more attractive for moms and pops. For instos and pension funds (basically the investors that count), it means nothing. Analysts are still only interested in earnings, a stock split does nothing for that.

I think you underestimate the impact of non-institutional investors. I am not suggesting that they carry the company, but they do have an impact. Sometimes a little momentum is all it takes to get the big fish into the pond.

[StudioGuy]

It does matter, pyscologically. There are stocks that have split many times over. Imaging those charts, IPO at $20 and now trading in the hundreds or thousands over many years.

Lowly investor then can only buy what, a few shares, instead of a few hundred or a thousand?

It helps, and is a message that they think there is room to grow. If they didn't, they'd be taking those teens and twenty dollar trading values last year and make them look like single digits if they thought this was just a bubble, and not a new growth path for AAPL.

Have fun anyway...

[Yvan256]

I bought at 12, sold at 35. What an idiot.

Don't be so hard on yourself. You can't predict the future.

An idiot would've bought at 35 and sold at 12. :D

[Bigheadache]

I think you underestimate the impact of non-institutional investors. I am not suggesting that they carry the company, but they do have an impact. Sometimes a little momentum is all it takes to get the big fish into the pond.

As I said before, if they are silly enough to push out the price, it won't last, gains will be arbitraged out by the smart investors. Not sure if you know much about the investment industry, but there are a ton of long/short, and arbitrage hedge funds who would jump on anything like this.
Its basic financial theory that prices are only effected by news which affect earnings.

[Koodauw]

I knew this was coming. Martha clued me in ahead of time.
Overall good knews. Keep up the growth Apple.

[Bigheadache]

It does matter, pyscologically. There are stocks that have split many times over. Imaging those charts, IPO at $20 and now trading in the hundreds or thousands over many years.

Lowly investor then can only buy what, a few shares, instead of a few hundred or a thousand?

It helps, and is a message that they think there is room to grow. If they didn't, they'd be taking those teens and twenty dollar trading values last year and make them look like single digits if they thought this was just a bubble, and not a new growth path for AAPL.

Have fun anyway...

Obviously not a shareholder in Berkshire Hathaway!!!

[macnews]

I bought at 12, sold at 35. What an idiot.

You can never lose money when taking a profit. Most definetly not what I would call an idiot. Besides, if you sold at 35, now you can get back in (due to the split) at the same price you sold.

A stock split does nothing, effectively, to those who own the stock. It does:

1. Make it more attractive to investors - both mom and pop as well as pension fund and instituional investors. Mom and pop because the price is no longer $70 per share, but rather $35 per share and "appears" more afforable. For institutional investors it becomes more attractive because it affects the companies P/E (price of the stock to earnings of the company). Apple is sitting at a P/E of 63, high for the sector and why some large investors won't buy. A lower P/E ratio will help, although some still think it will be too high, but at least it will be closer in line to others in the industry.

2. Indicate the company thinks it is doing well. This is like getting insider information because if Jobs is happy with twice the stock, he must have some reason for it - thus, he would hope the price would continue to increase. There does seem to be some "theoretical limit" on wall street where very few stocks trade over $100/share. They do exist (Berkshire Hathawy is one 'A' shares trade at $90,000 a share, and 'B' trade at $3,000/share), but are generally not good for companies who are growing.

{edit: I posted this w/o seeing Bigheadache's Birkshire reference}

[Bigheadache]

You can never lose money when taking a profit. Most definetly not what I would call an idiot. Besides, if you sold at 35, now you can get back in (due to the split) at the same price you sold.

A stock split does nothing, effectively, to those who own the stock. It does:

1. Make it more attractive to investors - both mom and pop as well as pension fund and instituional investors. Mom and pop because the price is no longer $70 per share, but rather $35 per share and "appears" more afforable. For institutional investors it becomes more attractive because it affects the companies P/E (price of the stock to earnings of the company). Apple is sitting at a P/E of 63, high for the sector and why some large investors won't buy. A lower P/E ratio will help, although some still think it will be too high, but at least it will be closer in line to others in the industry.

2. Indicate the company thinks it is doing well. This is like getting insider information because if Jobs is happy with twice the stock, he must have some reason for it - thus, he would hope the price would continue to increase. There does seem to be some "theoretical limit" on wall street where very few stocks trade over $100/share. They do exist (Berkshire Hathawy is one 'A' shares trade at $90,000 a share, and 'B' trade at $3,000/share), but are generally not good for companies who are growing.

You might want to check the math on the P/E ratio. If the price per share is halved, wouldn't the earnings per share be half? that would mean P/E is constant.

[lmalave]

There is no real effect. Occasionally you get a bit of exuberance (a bit like what we see in this thread already) and the price spikes, but afterwards it should settle down as rational investors realise its a non-event. If you are interested, look up 'Miller and Modigliani'

For a company with a very high public profile and very dispersed ownership, you can't assume that its investors are rational. The Modigliani-Miller theorem is just that, a theorem, describing a theoretical "ideal" scenario that does not exist in real life.

[lmalave]

Obviously not a shareholder in Berkshire Hathaway!!!

Warren Buffet refused to split the stock and keep the stock price high specifically to filter out investors that didn't really know what they were doing. The rationale being that if a stock costs tens of thousands of dollars, it will in general be traded only by professional money managers (e.g. mutual/pension fund managers or money managers for rich individuals). Once again proving that all investors are NOT rational, otherwise Buffet wouldn't have had to resort to this.

[geeyesgee]

Dang, I just sold my couple hundred shares at $80 a few days ago. Oh well, there's enough to pay down my mortgage so I'm not complaining--a 500% profit doesn't come very often. Thanks for the windfall, Apple!

[Bigheadache]

For a company with a very high public profile and very dispersed ownership, you can't assume that its investors are rational. The Modigliani-Miller theorem is just that, a theorem, describing a theoretical "ideal" scenario that does not exist in real life.

Just because the scenario does not exist, doesn't mean that it doesn't apply. I would argue that the US market is amongst the more sophisticated markets and therefore has a high level of efficiency and rational investors. And as for M-M, the scenario does not need to exist for the rules to apply. The main rule about m&m is that corporate structure has no relevance to the value of a business in a tax free environment. Since we have corporate taxes, this means that that there is an optimal corporate structure through the tax shield effect of holding debt. However, unlike having debt, there is no value gain from a stock split, hence it can't add value to the company. M&M is one of the foundations of finance theory.

[virus1]

im not sure if it has already been said, but, if the share prices are lower, then more people will be able to buy. (like me.)

btw: microsoft's share price is around $26, so it may seem that apple is doing better in the market, to first time investers (like me).

[machowiak]

Its basic financial theory that prices are only effected by news which affect earnings.

Right. Which is why some companies trade at 30:1 price:earnings and others trade at 60:1... because of the news. You couldn't possibly have made my point any better. It's the small investor that is influenced by things like the news and stock splits. It's the professional that takes in all sorts of things like the liquidity ratios, return on assets, et cetera. If you're going to talk about what PROFESSIONALS like to see in a company, at least know what it is they're looking for.

You're right. In the long run, things will even out. But do you really think anyone in this country cares about the long run? If they did, they wouldn't drive SUVs and they would recycle. It's all about the short term, and that's exactly what a stock split is for.

[Bigheadache]

Warren Buffet refused to split the stock and keep the stock price high specifically to filter out investors that didn't really know what they were doing. The rationale being that if a stock costs tens of thousands of dollars, it will in general be traded only by professional money managers (e.g. mutual/pension fund managers or money managers for rich individuals). Once again proving that all investors are NOT rational, otherwise Buffet wouldn't have had to resort to this.

Actually thats a pretty BS statement I hope you have something to back that up. There is a gain in not having small investors, you save alot of money in admin costs from printing annual reports, admin, etc. Alot of companies which I analyse that demutalise wind up with large numbers of small investors. In Australia/UK, an example is HHG (I can't think of a US example at the moment) which has millions of shareholders with parcels of under 1000 stocks. They are buying back the small holdings to save admin costs.

[MacBandit]

Last time Apple did this it was years before Apple shook the image that it's stock had taken a plunge when in reality it was worth the same just spread out over a larger number of stocks. This false image drove Apples stocks down to a near record low. I'm afraid for the near future of Apple's. We'll see if history repeats it's self.

[Bigheadache]

Right. Which is why some companies trade at 30:1 price:earnings and others trade at 60:1... because of the news. You couldn't possibly have made my point any better. It's the small investor that is influenced by things like the news and stock splits. It's the professional that takes in all sorts of things like the liquidity ratios, return on assets, et cetera. If you're going to talk about what PROFESSIONALS like to see in a company, at least know what it is they're looking for.

You're right. In the long run, things will even out. But do you really think anyone in this country cares about the long run? If they did, they wouldn't drive SUVs and they would recycle. It's all about the short term, and that's exactly what a stock split is for.

You are right in a sense, but the window for the gain is very small. If small investors started pushing the price up purely from a stock split, then I can guarantee a number of hedge funds will start shorting the stock.

[legacyb4]

That's assuming that you would only buy full shares at the current $80ish price; after all, an initial investment of $500 is the same regardless if you buy 1 or 10 shares...

What really helps is this takes the spotlight off of Apple from the doomsayers predicting an implosion at $100 (or whatever the highest predicted price was recently) and signals a positive outlook by the company for performance this year.

Also, with Tiger coming out this year and who knows what other hardware surprises, the stock will appear a lot more appealing to the casual investor wanting to get into AAPL.

im not sure if it has already been said, but, if the share prices are lower, then more people will be able to buy. (like me.)

[zac4mac]

I'm new to this stock mess, but to me it seems like my stock will have more room to grow now. Kind of expected a split if it hit 100/share, so I'm pleasantly surprised at this news. So how long till it's back up to 80/share?

Zack

[lmalave]

since i'm no finance whiz, i'll let Investopedia.com explain:

"A stock split is usually done by companies that have seen their share price increase to levels that are either too high or are beyond the price levels of similar companies in their industry. The primary motive is to make shares seem to be more affordable to small investors even though the underlying value of the company has not changed.

A stock split usually results in a share price increase since many small investors think that the stock is more affordable and buy the stock. Another reason for the price increase is that a stock split provides a signal to the market that the company's share price has been increasing and people assume that this growth will continue in the future."

With regard to the second point, it is also a signal to the company that it *itself* predicts the stock price will go up, not just "people" at large. Companies often use market signals like this to tip off investors to their strength, without discussing specific details (since the reasons for their optimism may have to do with unannounced products). For example, a company (provided it has a strong reputation for financial prudence already, as Apple does) will sometimes take on a lot of debt just to signal to the market "hey, we're doing so well that we can borrow money to take on huge projects, and pay them off in the near future without breaking a sweat."

So hey, since this IS a rumor site: my interpretation is Apple is signaling to the market not only that iPod and Mac sales will blow away expectations, but that Apple has OTHER products in the pipeline that will shock and awe the computer and consumer electronics markets.

So let's get the rumor mill started: iPhone, iHome (e.g. Mac Mini 2.0), PowerBook G5, Cell processor based Macs. Sky's the limit!

[macnews]

You might want to check the math on the P/E ratio. If the price per share is halved, wouldn't the earnings per share be half? that would mean P/E is constant.

Have to eat crow on this one! You are right, in my exuburance, I was forgetting the "E" stood for earnings PER SHARE. :o

[lmalave]

Actually thats a pretty BS statement I hope you have something to back that up. There is a gain in not having small investors, you save alot of money in admin costs from printing annual reports, admin, etc. Alot of companies which I analyse that demutalise wind up with large numbers of small investors. In Australia/UK, an example is HHG (I can't think of a US example at the moment) which has millions of shareholders with parcels of under 1000 stocks. They are buying back the small holdings to save admin costs.

Uh, do a Google search. Buffett himself has spoken and written volumes about his rationale for not splitting the stock. He's basically said in not-so-nice terms that it's to keep out the riff-raff, in language abrasive enought that I found it rather offensive.

[kuyu]

If nothing else, this gets Apple some free press on CNBC et al (they're talking about it right now, "stock of the hour"). To individuals, this is big. To pro's, it's a non-event. Slicing the pizza more times doesn't make it bigger.

For those looking to get into apple now, I would recommend you call your broker and have him look into some call options for you (as long and deep in-the-money as you can afford). Limited downside, unlimited upside. It's a spec play, for sure, but this is tech after all. :)

[WildCowboy]

This has sort of been addressed by others, but I'll give a slightly different explanation. Stock splits mean less now than they used to. Back in the old days (i.e. before the internet brokerages), trading was much more difficult for the small investor. The big brokerage houses often either required investors to buy stocks in round lots of 100 shares or pay extra in commissions to buy odd lots. The theory was that if everybody traded in multiples of 100 shares, it would be easier to match up buys and sells. (None of this "I've got someone looking to buy 17 shares!" and "But the only sells to match up right now are 64 and 79 shares!") So yes, stock splits made a stock more affordable to small investors...a round lot of Apple will drop from $8000 to $4000. But the e-brokerages have made it easy for anyone to buy any number of shares without restrictions. Trading volume has risen, and computers have made it easier to match buys and sells...round lots are no longer generally required. But the psychological effect of a cheaper stock and the impression that the company also thinks the stock will continue to rise are real.

[lmalave]

Just because the scenario does not exist, doesn't mean that it doesn't apply. I would argue that the US market is amongst the more sophisticated markets and therefore has a high level of efficiency and rational investors. And as for M-M, the scenario does not need to exist for the rules to apply. The main rule about m&m is that corporate structure has no relevance to the value of a business in a tax free environment. Since we have corporate taxes, this means that that there is an optimal corporate structure through the tax shield effect of holding debt. However, unlike having debt, there is no value gain from a stock split, hence it can't add value to the company. M&M is one of the foundations of finance theory.

You're right, M&M theorem is about debt/equity ratio not mattering now that I recall. In my forgetfulness I just repeated the other poster's reference to M&M. I guess more generally I was making a comment about the "rational markets" hypothesis. Yes, the U.S. market is relatively sophisticated but that does NOT mean that its investors are rational. Because the percentage of the population invests directly in stock went up so dramatically in the last decade or so, there are simply a lot of investors that only have a vague clue about what they're doing. Therefore you get things like the dot-com bubble which after all was not that long ago!

I mean, yes, rational expectations are the foundation of finance theory, which is why smart investors simply exit the market when it appears that it's behaving irrationally. Because otherwise you're just gambling and may as well put your money into playing online poker.

[Porchland]

1999 called. It wants its bubble back.

Look around, man. This is not happening for everyone else. HP's share price dipped enough that the board fired the CEO. Other manufacturers and mature software vendors that have had a solid year made much more marginal imrovements in share price than Apple.

If this were a bubble, I woud expect to see many, MANY more IT companies trading at their 365-day highs.

Apple is doing a lot of things right at the moment: an iPod that continues to dominate and bring Mac buyers into the market, iPod minis that are still sometimes difficult to find, iPod shuffles flying off the rack, Mac mini getting unbelievable traction with first-time Mac buyers, and iLife/iPod bringing people into the market that aren't so much switchers as adders.

There's no bubble.

[Bigheadache]

Uh, do a Google search. Buffett himself has spoken and written volumes about his rationale for not splitting the stock. He's basically said in not-so-nice terms that it's to keep out the riff-raff, in language abrasive enought that I found it rather offensive.

That's an interesting interpretation you have. Buffett doesn't like stock splits because he doesn't want his stock traded by short term speculators. He only wants long term investors. The founders of Google actually share his belief so don't expect google to do a stock split either.

Not sure why you are personally offended by this view. I contend his main foes are daytraders and hedge funds who have a short time horizon whereas Buffett is long term value style investor.

[technocoy]

the casual investor (non-professional) base is growing constantly. apple has become one of the hottest brands in years, period. thus the casual/small investors are getting an ear-full of apple lately. the stock split bringing the cost per share down keeps the doors open for more of these people.

and please, i know alot of 20-30 year olds who are engaged in casual investing. let's kick the mom and pops cliche for all you high-brow 1st class geniuses. even if some of them may be moms and pops... ;)

[Sonofhaig]

Damn. Damn Damn Damn.
Why didn't I buy this stock??????? :(

[T.Rex]

There's no bubble.

The whole American economy is a bubble, thanks to your federal government's inability to create a balanced budget. The worst offenders of course being "fiscal conservatives" like Reagan and Bush.

U.S. National Debt Clock (http://www.brillig.com/debt_clock/)

[Echinda]

A stock split is not necessarily an end to itself. It can be a means. This is a rumor site, so here goes some rampant speculation: If you were Jobs and you wanted to spin-off of your iPod division, you might want to up your float so as to give people shares to trade in on the spin-off without materially impacting your stock's post-spin liquidity. There are holes in that theory, but its just an example of another reason for a split.

[Daveway]

I'm rich Biot*h. I will soon be the the proud own of 400 shares of Apple common stock. My mom called me up yelling this to me this morning. Great new for Apple.

[varmit]

Now I have more stock, same amount of profit, and a likely chance of the stock going up and up, I'm happy.

[pimentoLoaf]

Palm was trading around $9 back in early 2003; selling off something else, I could've had around 3000 shares of it.

In September of that year, they merged with Handspring and had a 3:2 split -- meaning, multiply by 3 = 9000 then divide by 2 = 4500.

The stock then zoomed to around $40 * 4500 = $180,000.

I would've made a $152,000 profit. :eek:

But didn't. :(

[TheMasin9]

What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102

its not really that big of a deal except it gives shareholders more options and makes the stock more applealing to other buyers

[dloomer]

This must be a dumb question since no one has asked it, but what happens between the 18th and 28th ... is AAPL just not traded then? If you have to hold the stock before the 18th to get in on the split, but the split doesn't happen until the 28th...

[wrldwzrd89]

In the long run, the net effect of a stock split is zero. In the short run, it serves to make the stock in question easier to buy for small investors, and also acts as a signal from the company splitting their stock that they expect it to continue to grow.

A similar situation applies to a stock merge (the exact opposite of a stock split). In this case, the company merging their stock is not doing so well and wants to make their stock not look so bad. It tells investors that the company is in bad times and is taking measures to get back on solid ground. Sometimes these fail, and the company dies along with them.

[MacBandit]

This must be a dumb question since no one has asked it, but what happens between the 18th and 28th ... is AAPL just not traded then? If you have to hold the stock before the 18th to get in on the split, but the split doesn't happen until the 28th...


The split doesn't value or devalue the stock in anyway so trading goes on as normal. The only way it may devalue the stock is if as in the past some look at it as a depreciation of stock value causing stock to actually lose value.

[Yamson]

This must be a dumb question since no one has asked it, but what happens between the 18th and 28th ... is AAPL just not traded then? If you have to hold the stock before the 18th to get in on the split, but the split doesn't happen until the 28th...

I had the same question... It seems like under that scenario no one would buy in to Apple between those two dates because their stock values would be essentially cut in half come the 28th (since they were not in by the 18th, they would not receive the two-for-one split). I feel like I'm missing something here. I am a novice investor and I do generally understand the concept of a split and that it shouldn't change the overall value of an individual's investment, but this part confused me. Someone please explain?

[jkeithh]

I bought at 12, sold at 35. What an idiot.

I feel your pain. I sold at $25.

[kenaustus]

One of the interesting factors related to the small investor and their purchasing AAPL is the influence this might have on them when they replace their computer. Think they will finally look at Macs?

As I recall this is the on only reason old Henry Ford sold shares in Ford - someone told him that shareholders in GM would buy a Chevy and if they could "own part of Ford" they would buy Fords. He sold the stock so individuals could own part of the company and buy Fords.

Almost a century old concept, but I would think it is still valid. For me this is the primary benefit for a stock split for companies in the consumer markets and I would have been happier if Apple would have come out with a 3 for 1 split.

[tinydancer]

Hmmm, not sure why you guys think this is good news. Stock splits don't mean anything.

Hmmmm....to the contrary. It means everything. The value may not chage because I have twice ass many shares trading at half the price, but as the stock price goes up, (Apple is on fire) I now havce twice as many shres gain $$$$. Do the Math!

[Yamson]

Hmmmm....to the contrary. It means everything. The value may not chage because I have twice ass many shares trading at half the price, but as the stock price goes up, (Apple is on fire) I now havce twice as many shres gain $$$$. Do the Math!

Yes, but your twice as many shares are earning half as much as they would otherwise... 2 * 1/2 = 1.

[dloomer]

The split doesn't value or devalue the stock in anyway so trading goes on as normal. The only way it may devalue the stock is if as in the past some look at it as a depreciation of stock value causing stock to actually lose value.

To clarify what I said -- the MacRumors post states that you must hold the stock by the 18th to get in on the split. So if I buy on the 19th, I don't get in on the split? Which means that on the 28th, I have the same number of shares but the value is approximately half of what I bought it for?

I'm wondering if the text was a typo. Maybe the 18th should be the 28th or vice versa...

[tinydancer]

You all keep debating the merits of a stock split and I'll be in the other room making some money.

[wrldwzrd89]

Yes, but your twice as many shares are earning half as much as they would otherwise... 2 * 1/2 = 1.
Correct...but tinydancer was referring to the fact that a stock split often leads to future growth in share price, thus more profit than would be earned without the split.

[Yamson]

Correct...but tinydancer was referring to the fact that a stock split often leads to future growth in share price, thus more profit than would be earned without the split.

I dunno... Looks to me like in the last two Apple splits the price went more or less flat, or dropped significantly (granted, due to factors unrelated to the splits). Splits don't necessarily mean increased growth.

[tinydancer]

Yes, but your twice as many shares are earning half as much as they would otherwise... 2 * 1/2 = 1.
What are you talking about?
Example:
on average over the past 3 weeks Apple has been earning about 50 cents a day.
If I have 10 shares at $80 and there is a split. I now have 20 share at $40. Yes, the value is the same, but as the stock price continues to grow, I now have 20 shares earning 50 cents a day as opposed to 10 earing 50 cents. I have more shares in the company growing. How is this confusing? Yes, at the split the value is the same, but with more shares earing every day then I'm all for it.

[wrldwzrd89]

I dunno... Looks to me like in the last two Apple splits the price went more or less flat, or dropped significantly (granted, due to factors unrelated to the splits). Splits don't necessarily mean increased growth.
You're right...I guess AAPL investors don't really understand the implications of a stock split.

[Yamson]

What are you talking about?
Example:
on average over the past 3 weeks Apple has been earning about 50 cents a day.
If I have 10 shares at $80 and there is a split. I now have 20 share at $40. Yes, the value is the same, but as the stock price continues to grow, I now have 20 shares earning 50 cents a day as opposed to 10 earing 50 cents. I have more shares in the company growing. How is this confusing? Yes, at the split the value is the same, but with more shares earing every day then I'm all for it.

You have to look at it in terms of percentages. A 1% price increase per share is a 1% price increase per share whether it costs $40 or $80. In the former case, you just earned 40 cents per share, but you have twice as many. Without the split you would have earned 80 cents per share, but have only half as many shares. It's all about percentages.

[trose]

I wish I would have had more money to invest.

I bought 20 shares at $12 (In part due to this site keeping me informed on the iTunes Music Store and PPC970 before they were released), still have em, so ya they have turned a nice profit especially for someone my age (18), but boy it would have been nice to have had... say, 100, or 1000 shares :D.

I'm hesitant on whether I should invest anymore... on one hand I have a strong belief that Apple has a lot of growing room.
The iPod is still booming, the market is not saturated. Talking on the phone everyday to people with PCs, fixing their problems, I realize it's not just a minority anymore who are frustrated with Windows. People have wizened up (just a bit :P ), computer viruses and spyware are household words now.
In the next 5 years I see Macintosh sales increasing substantially, spurred by the Mac Mini and dissatisfied Windows users. I see Apple rolling with their digital media player and store concept, moving onto video and who knows what else.
To me, it feels like Apple is really in tune with what the public wants now, the first time it has really been since the release of the first iMac, when people were sick of 20 years of beige and boring computing.


On the other hand, this is all speculation. I'm not a financial wiz, I can do the standard evaluations of a stock(which would tend to tell you Apple is overvalued), but I can't estimate future earning and profits, etc etc.

Hmm...

[billystlyes]

I almost bought Apple at 18 dollars! :mad: I did however buy some sahes at 40! :p

[swissmann]

I had Apple stock the last time they split. I would sure like to be part of their stock now but funds are limited. Hope Apple stock stays strong.

[MacBandit]

You're right...I guess AAPL investors don't really understand the implications of a stock split.


Even stock gurus were commenting about Apples loss last time Apple made a stock split. They still continue to make the comments about how Apples stock went from $50 whatever a share to half that overnight without any mention of the stock split. Everytime I hear it mentioned I get enraged it's like they don't do any research and just look at the graph of the stocks value.

[trose]

Even stock gurus were commenting about Apples loss last time Apple made a stock split. They still continue to make the comments about how Apples stock went from $50 whatever a share to half that overnight without any mention of the stock split. Everytime I hear it mentioned I get enraged it's like they don't do any research and just look at the graph of the stocks value.

What you gotta realise is that stock "gurus" rarely really have a passion or interest in the companies they invest in. They look at the numbers and make up their mind. They don't know anything about Apple's history or plans besides what was put out in press releases.
They are experts at reading numbers and predicting standard trends, but they will not be able to cope with a company that does something non-standard. Which of course, we all know Apple is anything but standard in it's earnings or business.

One tip the Motley Fool (really the best investing resource for common folk) gave me that has payed off, is investing in companies and markets you know.
Besides Apple I have also invested in a couple other companies in fields I enjoy, and have made considerable (Double value) gains on them in the last 2 years, also.

[ChronoIMG]

Hmmm, not sure why you guys think this is good news. Stock splits don't mean anything.
Actually they do. It's more of a physiological impact and with Apple stock on a tear lately, the price is getting high enough to cause more casual investors not to buy; physiological impact.

So, in theory, a stock split is good for the casual investor as the price is lower and it's great for current investors as they get more shares. Sure, the value at the time of split doesn't change but once the stock climbs back up, you'll be glad you owned the stock when it split.

[ChronoIMG]

I dunno... Looks to me like in the last two Apple splits the price went more or less flat, or dropped significantly (granted, due to factors unrelated to the splits). Splits don't necessarily mean increased growth.
The chart is interesting; however, the year 2000 did not include iPod.

[bit density]

What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102

There is theoritically no economic effect... However, it does tend to point to a company that is doing well, and there have been studies that have shown that if you bought a stock on the day it announced and sold on the day of the split you would have made money...
It increases the float so that it is generally easier to buy and sell lots.
It also helps control the price range. There are some mutual funds that have controls on the price of stock the will *buy* and that the shares have to be within a certain price range. Also small investors that would like to purchase shares in 100 lots find it easier to come up with a one lot purchase. Lastly, this tends to be *very* good to long term option holders (like employees, who not only get access to twice as much stock, it is at half the price.).

Since all of these things are based around buying activity, it tends to push the price up.

[bit density]

Actually they do. It's more of a physiological impact and with Apple stock on a tear lately, the price is getting high enough to cause more casual investors not to buy; physiological impact.


While I am enjoying the mental image of the physiological impact of a stock price. (It sure hits me in the GUT when a stock tanks!). I am pretty sure you mean psychological impact.

[dicklacara]

What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102

Some reasons that could apply:

1) Increase the number of shares available to entice/reward key people with stock options

2) The same reason for shares used to buy other companies.

3) Reduce the price so that Apple can repurchase shares, increasing the value of each share, and the number of shares Apple has available for the above

4) Apple is sitting on a lot of cash that might be better used investing in a company... a company like Apple.

IBM used to do this all the time.

[Yamson]

The chart is interesting; however, the year 2000 did not include iPod.

That's true... increasing iPod growth will probably lead to increasing stock growth. I don't think that really has anything to do directly with a split though. Historically speaking with AAPL, splits have not lead to significant immediate growth.

[Minkintosh]

I was thinking of getting some apple stock. Where is a good place online to buy some. DOes anyone know?

[MacBandit]

What you gotta realise is that stock "gurus" rarely really have a passion or interest in the companies they invest in. They look at the numbers and make up their mind. They don't know anything about Apple's history or plans besides what was put out in press releases.
They are experts at reading numbers and predicting standard trends, but they will not be able to cope with a company that does something non-standard. Which of course, we all know Apple is anything but standard in it's earnings or business.

One tip the Motley Fool (really the best investing resource for common folk) gave me that has payed off, is investing in companies and markets you know.
Besides Apple I have also invested in a couple other companies in fields I enjoy, and have made considerable (Double value) gains on them in the last 2 years, also.

This is true but the advice of these so said gurus affects a stocks over all value. If they just look at a graph and see that Apple took a plunge and don't do the research to see the stock split then they will not recoomend a buy on the stock causing the stock to dip lower and lower. This is exactly what happened with the last stock split.

[DPazdanISU]

i sold my stock at $23...WHY OH WHY :mad:

[Max12]

This must be a dumb question since no one has asked it, but what happens between the 18th and 28th ... is AAPL just not traded then? If you have to hold the stock before the 18th to get in on the split, but the split doesn't happen until the 28th...

Take a look at the following file:

http://www.snl.com/interactive/lookandfeel/4004205/StockSplitQ&A.pdf

[Yamson]

When a stock splits, its value does not suddenly drop. For example, the last split occurred on June 21, 2000, just a day after AAPL hit $100. If you look at a chart of historical prices, you don't see the stock value going from $100 to $50 on that day. All of the previous prices are adjusted for the split. So it looks like it was trading for $50 on the previous day. After the split, the stock bounced around between $50 and $60 until Sept 29, 2000, when it dropped from $48.13 to $25.75. This was unrelated to the split, and was due instead to lowered profit expectations to Q4 2000 (see http://news.com.com/2100-1040-246359.html?legacy=cnet ).

In March, after the split has taken place, you can look at the Apple price graph for the previous month, and it will look like the stock was trading around $40 -- not $80. The chart will be split-adjusted.

[faintedlife]

I almost bought Apple at 18 dollars! :mad: I did however buy some sahes at 40! :p

I bought mine around that price. The 18 that is. :)

The primary purpose and benefit for a stock split is to make it more attractive to more people by lowering the cost per share. The lower the price, the easier it is for people who don't have the ability to dish out $10,000 for stock to get in and purchase. A stock split doesn't do anything of value to the stock other than raising the amount of available shares. The hype will draw it up before the 18th, then after the split occurs it'll take a little bit for people to get over the realization that it didn't add any value to the stock, nor did it detract any value. It just makes it easier to purchase for individual investors.

[Yamson]

Take a look at the following file:

http://www.snl.com/interactive/lookandfeel/4004205/StockSplitQ&A.pdf

That answers my question... People who buy in between the 18th and 28th still do essentailly get to have their shares split on the 28th.

Q. What happens if I buy or sell shares after the Record Date and before the Split Date?
A. If you sell shares prior to the Record Date (February 18, 2005), you will be selling them at the pre-split price. If you sell shares after the Record Date (February 18, 2005) but prior to the Split Date (February 25, 2005) you will be selling them at the pre-split price and the shares will trade with a “due bill” (i.e., the shares you trade are “due” an equal number of shares issuable in the stock split). When you sell your shares, you surrender your pre-split shares and any shares due. The due bill is transferred to the new owner of the shares.
If you buy shares after the Record Date but before the Split Date, you will purchase the shares at the pre-split price and will receive a due bill. Following the split, you will receive (or your brokerage account will be credited with) an equal number of shares as a result of the stock split.

[applekid]

Lowered prices mean applekid is going to buy a couple of more shares. :cool:

Remember, a stock split means a share of Apple will be about $40. And people with shares already (like myself) will have more shares.

[joeboy_45101]

This equals momentum, what this shows is that Apple is growing. It also indicates that more people will have a chance to be part of this growth. This is very good news for all. :D

[JNB]

And dumping the remnants of my HDI & NFLX to snatch up a wee bit more AAPL - I'm already at 4X plus of my original value, so a little speculation is in order...

[whatever]

It really depends on who you are.

If you're a recent investor, it's not bad. If the stock drops down to $20.00, you still have more stock than you started off with.

If you bought it back when it was below 15.00, you can sell some now and still be way ahead of the game.

If you're looking to buy some, this is a good time to do so. Esp. if that Walmart deal happens, because the stock was projected to hit $100.00 before the split and could now run back up to $80.00 after the split (if this is announced).

Also at a lower price Apple could if they wanted to start buying back blocks.

Whatever

[Deefuzz]

For those currently holding shares through brokerage firms:

Do you still receive proxy's in the mail? Or have the option for a stock certificate? Do you get any other notices from Apple in the mail i.e. notice of shareholder's meetings etc?

Or does that information go to your broker?

[mdriftmeyer]

the flaw in your statement is that professionals, instos, and pension funds make up the big portion of investors and they see through this, plus they aren't impacted by minimum parcel sizes. As a result, the window where prices spike is very small. If there is a gain, you can bet it will be arbitraged out.


Really? Clearly you never bought Microsoft stock back in 1978. How many splits later and long-term holding has left the average investment of $2000 now valued in the millions.

I guess as many have pointed out you don't grasp the concept of Volume and want to live in the mathematically constrained world of Area.

[Richter]

how does one go about owning some stock?

[billystlyes]

I bought mine around that price. The 18 that is. :)

The primary purpose and benefit for a stock split is to make it more attractive to more people by lowering the cost per share. The lower the price, the easier it is for people who don't have the ability to dish out $10,000 for stock to get in and purchase. A stock split doesn't do anything of value to the stock other than raising the amount of available shares. The hype will draw it up before the 18th, then after the split occurs it'll take a little bit for people to get over the realization that it didn't add any value to the stock, nor did it detract any value. It just makes it easier to purchase for individual investors.


I hate you I hate you so bad! JK Way to go!

[Trout74]

here is some fuel for the rumor fire.

Apple releses 10.3.8
apple updates power books

Then apple announces 2 for 1 stock split, and wall street rallies

Split happens on the 18th.

Who wants to bet me that on the 18th, apple makes a few more announcements to give the stock a little momentum..............?

PowerMacs have not been updated for 303 days!!!!!!!!!!!!!!!!!
I bet they get updated on the 18th. Maybe the iMac's too..........

thoughts?

[ChrisH3677]

here is some fuel for the rumor fire.

Apple releses 10.3.8
apple updates power books

Then apple announces 2 for 1 stock split, and wall street rallies

Split happens on the 18th.

Who wants to bet me that on the 18th, apple makes a few more announcements to give the stock a little momentum..............?

PowerMacs have not been updated for 303 days!!!!!!!!!!!!!!!!!
I bet they get updated on the 18th. Maybe the iMac's too..........

thoughts?

That's the day my .Mac account renews. I guess they're speculating that I will renew it - thus causing a stock buying frenzy! :D :D :p :p :p

Now seriously.... I like your thinking... Maybe an announcement re the Cell? Or maybe they're just gunna tell us how well the Shuffle and Mini have sold.

[dicklacara]

This must be a dumb question since no one has asked it, but what happens between the 18th and 28th ... is AAPL just not traded then? If you have to hold the stock before the 18th to get in on the split, but the split doesn't happen until the 28th...

It will be traded.

Nothing much, unusual should but it likely will.

The stock was up $2.85 or 3.64%, today.

Here is what I suspect will happen: Because of Apple's visibility, the price will rise from today's $81.21 to the $90-$100 range by the 28th. After, market close the holdings & prices will be adjusted to reflect the split.

The few day/weeks, there will be some profit taking by the pros, driving the price down to the $30-$35 range. Then the pros will begin to get back in.

That is what I think will happen, however the profit-taking could take place before the split... driving the price down to the $60-$70 range by the day of the split,

In either case, AAPL will likely be trading in the $30-$45 range by mid March... about the same as it was trading a year ago.

[dicklacara]

I was thinking of getting some apple stock. Where is a good place online to buy some. DOes anyone know?


I use Scottrade-- flat fee of $7 per trade.

You have to setup an account wioth a $5,000. mimum value.

I have used them for a 1 1/2 years & like them a lot.

Only downside, their advanced Elite service is available in win onl--- bummer :(

It has lots of extras-- charts, Level II (see the trade traffic details)

www.scottrade.com

[wide]

I was thinking of getting some apple stock. Where is a good place online to buy some. DOes anyone know?

Location: FL how does one go about owning some stock?

Well, you need to find a broker first. Most large brokerage firms let you buy, sell, and short stocks online. Off the top my my head, there is CyberTrader, ShareBuilder, Schwab, Fidelity, E*trade, Ameritrade, and Scottrade.

I personally use Schwab (www.schwab.com) but I think it is more expensive than other firms. If you do not own stock currently, I think ShareBuilder (www.sharebuilder.com) might be a good choice. Their basic program, which I believe has no monthly fee but costs $4 per trade (called a commission fee--in contrast, Schwab charges me $9.95 as a commission fee). Subscription programs can lower that cost to $2 and $1 depending on how much you are willing to pay per month. Just beware: real-time market orders are much more expensive, and are unimportant for the average investor that wants to be long a stock (be long = to have stock in ones portfolio).

Mikintosh--I have stock in Apple. I bought it at around $35 per share--undet half a year ago. For that reason, I would be careful putting money into Apple. It is very rare for a company to be trading well in excess of 100% of its value six months before. While I think it was undervalued a year ago, its rapid growth has made it, in my perspective, a very volatile investment. I have not sold yet because I believe it will push further, but it is important that you understand that its growth is abnormal and, by many valuations, unjustifiable.

...in other words, I would not put my life's savings into Apple right now.

Good luck!

-wide

[macidiot]

What is the effect of doing this? I understand the fact that there are now twice as many shares available at half the price, but what is the real economic effect?

-ac2102

None really. Its basically the difference between a $10 bill and 2 $5 bills.

[dicklacara]

For those currently holding shares through brokerage firms:

Do you still receive proxy's in the mail? Or have the option for a stock certificate? Do you get any other notices from Apple in the mail i.e. notice of shareholder's meetings etc?

Or does that information go to your broker?


Either way, your option!

You still own the stock regardless if it is at your brokers or in your safe at home. You are entitled to receive all the proxies, dividends, etc.

Day traders usually don't care because they only hold a position for a short period of time (hours or days). Though some do get creative around a stock's data-of-record (AAPL Feb 18) for a split or dividend. Their position may be long-gone by the date of execution (AAPL Market Close Feb 28). But if they had the position on the date-of-record, they get the results as of the date of execution (add'l shares or dollars)

[ChronoIMG]

That's true... increasing iPod growth will probably lead to increasing stock growth. I don't think that really has anything to do directly with a split though. Historically speaking with AAPL, splits have not lead to significant immediate growth.
While I would agree; back when Apple had splits they weren't in the music business. Everyone knows that if Apple weren't in the music business we wouldn't even be having this discussion as the stock would probably still be at $14 :)

[dicklacara]

That's the day my .Mac account renews. I guess they're speculating that I will renew it - thus causing a stock buying frenzy! :D :D :p :p :p

Now seriously.... I like your thinking... Maybe an announcement re the Cell? Or maybe they're just gunna tell us how well the Shuffle and Mini have sold.


They need to be careful... there are times and ways to announce company performance dictated by law, SEC Rules and custom. If they do things that improperly influence investors their stock could be delisted and/or the executives could wind up in jail.

Enron, ron a do-ron ron

[macidiot]

Warren Buffet refused to split the stock and keep the stock price high specifically to filter out investors that didn't really know what they were doing. The rationale being that if a stock costs tens of thousands of dollars, it will in general be traded only by professional money managers (e.g. mutual/pension fund managers or money managers for rich individuals). Once again proving that all investors are NOT rational, otherwise Buffet wouldn't have had to resort to this.

Buffett refuses to split the stock because he feels it is basically worthless to do so. It has nothing to do with filtering out investors. But, he did create the B shares to deal with speculators(at the time, investors were pooling their money to buy shares...somewhat like mini private mutual funds) and create a more "flexible" stock. B shares are like a tracking stock and are, I think, worth about 1/20 of an A share. However, they are restricted in certain ways. An A share holder can convert at any time to B shares, but B share holders cannot convert to an A share.

btw, BRK is not traded only by professional money managers. Less than 30% is owned by institutions. The stock is very unappealing to institutions because it is fairly illiquid. The majority of investors are individuals. If anything the stock price has done the reverse of what you suggested: it has driven professional money managers away.

As for affordability. Most serious investors can afford this stock if they want it. A basic rule of thumb I tell beginning investors is that if you need about 100k to properly invest in individual stocks. Anything less, you should be in an index fund, imo. Why 100k? Because it allows you to properly diversify your portfolio. You can own 10-20 stocks and actually have decent positions.

But I do agree that the stock market is NOT rational. And thank god it isn't. If it were, in theory all stocks would always be correctly priced at all times. Emotion and information are the 2 factors that keep that from happening.

[TorbX]

I think this will have an effect on first time-buyers? I'd like to buy some apple shares (I want a bite, lol).

[Richter]

wide -
thanx for the suggestions, checking out Share Builder right now :cool:

[trose]

wide -
thanx for the suggestions, checking out Share Builder right now :cool:
I use Sharebuilder myself. No minimums, and $4 trades if wait for your order to go through on Tuesday (something about them getting discounts for mass orders on one day of the week).
Can't beat that.

[Deefuzz]

I use Sharebuilder myself. No minimums, and $4 trades if wait for your order to go through on Tuesday (something about them getting discounts for mass orders on one day of the week).
Can't beat that.

Someone else had recommended Sharebuilder to me as well...So they are pretty reputable? No minimums? So I can just buy 1 share of Apple stock from them to get the proxies and the stock certificate if I wanted to? :D

[oldMac]

Hmmm, not sure why you guys think this is good news. Stock splits don't mean anything.

There are two kinds of investors:

1) Ignorant "dummies" who believe that stock splits mean something

2) Ignorant "smarty-pants" who believe that the market is rational

[krisjon]

Bought 1000 shares around $16.50 18+ months ago. I'm a happy camper.

[pimentoLoaf]

I have TDWaterhouse for a broker, but I opened an account years ago. I only use the online services for research and account data though I could easily day-trade with it.

[ssnmx]

I have a newbie question...

I'm a student, and I've saved just over 1k in the last few months.
I'm looking forward to invest it somehow... and since I've seen the great performance of AAPL, I've considered buying some shares...

My question is... do you think it would be a good idea? I mean, 1K would be like roughly 25 shares after the split... I'm interested in the money I can get in the short term. The main reason why I want to buy stock is because my money in the bank earns peanuts and I need to pay a loan.

What do you guys think?
Any thoughts would be appreciated.

[wide]

I have a newbie question...

I'm a student, and I've saved just over 1k in the last few months.
I'm looking forward to invest it somehow... and since I've seen the great performance of AAPL, I've considered buying some shares...

My question is... do you think it would be a good idea? I mean, 1K would be like roughly 25 shares after the split... I'm interested in the money I can get in the short term. The main reason why I want to buy stock is because my money in the bank earns peanuts and I need to pay a loan.

What do you guys think?
Any thoughts would be appreciated.

Well, if anything, don't keep it in your bank account...

put it in fixed income (around 4 percent per year). That way, at least you beat inflation.

Apple is risky, and no one here knows for sure what will happen to it. No one in the world knows, for that matter.

It's really unfair to ask someone what they think about where you will be putting money if they aren't a professional. If I were you, I would put your money in a safer investment, one that hasn't gone up over 100 percent in under half a year.

[T.Rex]

I have a newbie question...

I'm a student, and I've saved just over 1k in the last few months.
I'm looking forward to invest it somehow... and since I've seen the great performance of AAPL, I've considered buying some shares...

My question is... do you think it would be a good idea? I mean, 1K would be like roughly 25 shares after the split... I'm interested in the money I can get in the short term. The main reason why I want to buy stock is because my money in the bank earns peanuts and I need to pay a loan.

What do you guys think?
Any thoughts would be appreciated.

Like yourself, I'm a student and I've been playing around on the stock market for a year or two through an online broker (TDWaterhouse). I would suggest you stay out of high priced, well known stocks - really, they are much more long term investments than I am interested in. I've had the best luck with resource stocks (gold, oil, copper, etc.), and your best bet is to find a company that is in the exploration or early drilling stage. This is because when you're only playing with a relatively small amount of money, like 1 or $2k, you want a stock that has a low share price (under $1/share) simply because it is much easier for a 50cent stock to double to a dollar, than it is for a $50 stock to double to $100. On the other hand, it is also easier for this 50cent stock to halve to 25cents! But no one said playing stocks was easy!

A good way to start is to go to a place like www.stockhouse.com and just read the message boards (known as the "bullboards") and just read up on what people have to say about different stocks. Find a few that interest you and follow them for a while; reading the press releases, watching the trends, and reading the message board posts. You can learn a lot this way, and there is no risk of losing any cash. Then, once you have followed a stock for a while and have done some reasearch into the company, then buy some shares and let the games begin.

Only a short while ago I knew nothing about the stock market, but now I've made thousands of dollars by doing nothing than a little research and a few mouse clicks. For instance, only last month I bought 3500 shares of a copper company trading at 91 cents; today that stock closed at 1.88. On top of that, I've learned to read the trends in its price fluctuations (selling when it reaches a new high, then waiting for it to drop 10 or 15 cents and buying back in again) - this way I have picked up an additional 500 shares simply by playing the market.

There's no guarantees in the stock market, but it can be a fun an easy way to make some extra cash. Heck, with the money I've made in the past month, I bought myself a 20" cinema display and I'm still up a few grand! It just takes some time and effort to do some reasearch...a little luck doesn't hurt either! Hope this helps.

[MacBandit]

how does one go about owning some stock?

You could also use www.etrade.com which has a $1000 startup minimum.

[macidiot]

Like yourself, I'm a student and I've been playing around on the stock market for a year or two through an online broker (TDWaterhouse). I would suggest you stay out of high priced, well known stocks - really, they are much more long term investments than I am interested in. I've had the best luck with resource stocks (gold, oil, copper, etc.), and your best bet is to find a company that is in the exploration or early drilling stage. This is because when you're only playing with a relatively small amount of money, like 1 or $2k, you want a stock that has a low share price (under $1/share) simply because it is much easier for a 50cent stock to double to a dollar, than it is for a $50 stock to double to $100. On the other hand, it is also easier for this 50cent stock to halve to 25cents! But no one said playing stocks was easy!

A good way to start is to go to a place like www.stockhouse.com and just read the message boards (known as the "bullboards") and just read up on what people have to say about different stocks. Find a few that interest you and follow them for a while; reading the press releases, watching the trends, and reading the message board posts. You can learn a lot this way, and there is no risk of losing any cash. Then, once you have followed a stock for a while and have done some reasearch into the company, then buy some shares and let the games begin.

Only a short while ago I knew nothing about the stock market, but now I've made thousands of dollars by doing nothing than a little research and a few mouse clicks. For instance, only last month I bought 3500 shares of a copper company trading at 91 cents; today that stock closed at 1.88. On top of that, I've learned to read the trends in its price fluctuations (selling when it reaches a new high, then waiting for it to drop 10 or 15 cents and buying back in again) - this way I have picked up an additional 500 shares simply by playing the market.

There's no guarantees in the stock market, but it can be a fun an easy way to make some extra cash. Heck, with the money I've made in the past month, I bought myself a 20" cinema display and I'm still up a few grand! It just takes some time and effort to do some reasearch...a little luck doesn't hurt either! Hope this helps.

Sorry, but dealing in pink sheet stocks are just about the worst advice to give a novice. You might have gotten lucky, but thats all, you got lucky. You could have just have easily seen your money disappear. Penny stocks are the usual havens of pump and dump operations, have little or no governence or reporting, and very unreliable financial reporting and often false or misleading "press releases." There are a host of other reasons to avoid this type of investing.

What your advising is basically the equivalent of going to Vegas and putting a $1000 on black at the roulette wheel.

[sunilraman]

**snip snip**
Mikintosh--I have stock in Apple. I bought it at around $35 per share--undet half a year ago. For that reason, I would be careful putting money into Apple. It is very rare for a company to be trading well in excess of 100% of its value six months before. While I think it was undervalued a year ago, its rapid growth has made it, in my perspective, a very volatile investment. I have not sold yet because I believe it will push further, but it is important that you understand that its growth is abnormal and, by many valuations, unjustifiable.

...in other words, I would not put my life's savings into Apple right now.

Good luck!

-wide

Dude, are you able to divulge whether you have a stop-loss on it? (whether that's specified with your broker or a psychological point to cut it loose if it starts dipping)....

My gut instinct tells me that Apple will do well this year but somehow buying it past $70 (or say $40 post-split) is on the high side of moderate risk :cool:

But then something phenomenal happens this year that pushes it to $70 post-split by the end of the year :eek: We all know that Apple is in the best position it has ever been in and it has hit upon a genuine formula (hmm that could be an oxymoron) for being *profitable* and still *revolutionary* in the digital age

hah! that's where this being a rumor site not a financial site comes in... although, shares and rumors, there's always been a link there ;)

but don't listen to me, i am $6000 Australian Dollars in credit card debt which my parents are helping me to pay off slowly (i am living with them now) :( :o

[ASP272]

Awesome! Now even I can afford to invest in Apple! Added to my UPS stock, it should make a sweet (but small) portfolio.

Cool Beans! :D

[T.Rex]

Sorry, but dealing in pink sheet stocks are just about the worst advice to give a novice. You might have gotten lucky, but thats all, you got lucky. You could have just have easily seen your money disappear. Penny stocks are the usual havens of pump and dump operations, have little or no governence or reporting, and very unreliable financial reporting and often false or misleading "press releases." There are a host of other reasons to avoid this type of investing.

What your advising is basically the equivalent of going to Vegas and putting a $1000 on black at the roulette wheel.

I agree that it is more risky, but as they say nothing ventured, noting gained. Sure he could put that $1000 in something like IBM or Apple, but the possible gains are so minimal you're better off just buying a GIC or savings bond! If you're not prepared to take a risk, don't invest at all.

Anyways, I never said anything about investing in penny stocks. I'm sorry, but there is a big difference between some penny stock and an established resource stock (many of which trade under $1), where the company regularly reports drilling results, has hosts of financial backers, and millions in the bank.

This is where real money is made in the stock market - sorry if you don't have the guts for it.

[MacBandit]

I agree that it is more risky, but as they say nothing ventured, noting gained. Sure he could put that $1000 in something like IBM or Apple, but the possible gains are so minimal you're better off just buying a GIC or savings bond! If you're not prepared to take a risk, don't invest at all.

Anyways, I never said anything about investing in penny stocks. I'm sorry, but there is a big difference between some penny stock and an established resource stock (many of which trade under $1), where the company regularly reports drilling results, has hosts of financial backers, and millions in the bank.

This is where real money is made in the stock market - sorry if you don't have the guts for it.


Some people are saving for retirement. Saying if your not willing to take a risk don't invest at all is a gross generalization and and udderly rediculous. There is such a thing as a safer longer term payoff. Not everyone needs to get rich quick.

[beatle888]

I think it's generally seen as a positive sign about prospects for the company.... but yes, at face value, it doesn't mean much.

arn


to me it means a whole lot a good opportunity to buy my most valued stock at half the price it is today. stock splits are good.

[StudioGuy]

Obviously not a shareholder in Berkshire Hathaway!!!

Yeah, yeah - got me there, but they are not the norm of course :p

[macridah]

This just means I have more shares and lesser value, but my total is exactly the same. I would rather see apple at over 100, then split.

But now after the split, new investors will say "Apple for 40, what a deal, I'm buying."

[512ke]

"because the price is...rather $35 per share and "appears" more afforable."

Ah... as a 3 GHZ Pentium "appears" faster than a 2.5 GHZ G5.

Perception, perception, perception.

[dicklacara]

This just means I have more shares and lesser value, but my total is exactly the same. I would rather see apple at over 100, then split.

But now after the split, new investors will say "Apple for 40, what a deal, I'm buying."


There is reasonable chance of that happening. It would be about 20% return!

[macidiot]

to me it means a whole lot a good opportunity to buy my most valued stock at half the price it is today. stock splits are good.

That makes no sense whatsoever. So what your saying is that you think its good to buy 20 shares at 50 instead of 10 shares at 100? Guess what, you still just spent 1000.

And if thats your thinking...more is better, I'd be happy to trade you 10 crisp new 1 dollar bills for that lame old 20 dollar bill of yours. Just think, 10 for 1!

[macidiot]

I agree that it is more risky, but as they say nothing ventured, noting gained. Sure he could put that $1000 in something like IBM or Apple, but the possible gains are so minimal you're better off just buying a GIC or savings bond! If you're not prepared to take a risk, don't invest at all.

Anyways, I never said anything about investing in penny stocks. I'm sorry, but there is a big difference between some penny stock and an established resource stock (many of which trade under $1), where the company regularly reports drilling results, has hosts of financial backers, and millions in the bank.

This is where real money is made in the stock market - sorry if you don't have the guts for it.

So silly its almost sad. But since you appear to need some information here goes...

Gains so minimal by investing in Apple or IBM you might as well invest in a bond? Umm, the 30% gain by Apple in the past month and 400%+ gain in the past year blows a hole in that thinking. As for IBM, granted the stock hasn't done much lately, but the dividend alone makes it more attractive than bonds.

As for your "resource" stocks, if they trade under a dollar, they are by definition penny stocks. I have no doubt that there are some well capitalized responsible companies tradiing under a dollar. But the vast majority of them are priced the way they are for a reason. Things like...major corporate problems, shouldn't have gone public in the first place, too much float. All of which screams bad and/or deceptive management.

I know plenty about the risk/reward relationship in investing. I just happen to think that investing in penny stocks is the equivalent of going to a casino. You might hit it big, which sounds like you've had the good luck to do, but more often than not, your going to lose. There's also money to be made in mlm marketing schemes. Doesn't mean I want to do it.

About making real money in the market... its been proven time and time again that buying and holding good companies with good management wins out over any other strategy. Don't even bother arguing the point. Get back to me when you make over 100 billion investing in "resource" stocks. I suppose the BILLIONS Warren Buffett has made investing in "boring" companies like Gillette, Coca-Cola, Washington Post, and Disney isn't "real" money.

I've been investing for over 15 years and have a fairly good understanding of the markets. I also studied finance and majored in economics. My advice to you is to get some real experience under your belt before you advise beginning investors to invest in longshots. Right now it sounds more like the blind leading the blind.

Tell you what, if you manage to stick with your style of investing and are successful with it for say, 10 years, I will personally buy you dinner. Not that you'll need it since you'll probably be on the cover of Forbes, Fortune, and Barrons, having been hailed as the one of the greatest investors ever, having forced the investing world to rethink the way it should invest.

[legacyb4]

Wondering if Apple plans to split again before the Intel-Mac frenzy hits the street or if they will continue to ride the current pricing up and up?

[Lacero]

I dunno, but you got me all excited. It might do another stock split at $100.

[mxpiazza]

i bought at 37, now at almost 70... i feel like i should cut bait now, i was going to buy a ton of it a few years back when it was below 10, and i'm still kicking myself for that, so i think i'll stay put..

[danvdr]

i bought at 37, now at almost 70... i feel like i should cut bait now, i was going to buy a ton of it a few years back when it was below 10, and i'm still kicking myself for that, so i think i'll stay put..

But it's only money.....

[ThomasJefferson]

Sit on it.
Sell just before Steve retires.