From the 700 high and then the 200 pt death spiral, it's been a steady rise nearing 650 (pre-split). Dow and Nasdaq are at record highs .... and AAPL had split 7 to 1. Apple bought back a ton of their stock, but I believe the split is in reaction to the new tech bubble and AAPL in the low $90s is an emotional buy. Oh, yeah. That works for me on so many levels.
I remember having arguments with Carp (hello! where the heck are you?) where he stood firm on his belief that a stock split doubled the value of the share. I took the position that it holds the same value, it's a ploy used to lure larger numbers of investors.
So AAPL splits 7 to 1. I decided this was the time to buy, not only because shares were more affordable but also because I expect Sept/Oct to showcase new hardware and a whole new market of "wearables" ( a watch or bracelet, who knows. Surprise me Apple!). Whatever new product they release it will define a market like they've done with smartphones and tablets. It'll be big.
So it is totally emotional to focus on just one corporation for investment, and when I talked with a broker at Scottrade (I like them and there's a local office) he tells me that Apple stock is the biggest buy requests and the split lit a huge fire under it.
Back to Carp's point of view. I'm conceding part of my disagreement to him as a win. A split stock, specially a 7 to 1 split stock, is worth more. I mean this not a snapshot at any given moment, but in the "emotional" effect. The stock sells in greater volumes. The growth of the stock has a lot room still to attract lots of buyers, in that AAPL at 100 or 110 still seems like a good way to get on board. As a result of the split this makes it more valuable. I wonder how long I'll keep the 7 way split as a reference, but I suspect I'll ditch that mindset quickly. Specially when new product comes out. New phones, new OS and the expected wearable.
Of course there's also talk on CNBC today that the market is in a bubble and it could all crash at any moment
I just took advantage of the local housing bubble and got a great price selling my home, way better than I thought. Overnight became debt-free and wanted to park some money in AAPL and, damn Apple did this split and for me it all fell in place. If shares were still $650 I most likely would not have bought and would have done something safe and dull like fund Roth-IRAs. As emotionally tragic and corny as it sounds, I believe in Apple and there's a familiar comfort taking a risk with an AAPL stock buy. Yes, the time feels right to me. Perhaps this thread will need to resurface 18 months from now.
Loc: Alexandria, VA
As understand stock splits, when they do split, they retain the pre-spilt value. So you're not making or losing anything by the mere fact of the split. However, now that you have more individual shares, the more you will make / lose moving forward. (ex: a 2 for 1 split means that if the stock goes up 1 point, you'd make $2 on two shares instead of the $1 for the one share pre-split).
So while the split itself doesn't change the value of the shares, since you now have more of them, their earning potential as the stock rises is greater as a result ... as is the loss potential if it goes down =)
A $1 rise in the stock today would have been a $7 rise pre-split.
With the same "pre-split comparison", what seems more likely to happen, AAPL rising next week $91.7 to $100 (+8.3) or pre-split $641.9 to $700 (+ 58.1)?
This is why I think the split is a good thing. There's so much more stock being traded because the buy-in is lower and you're in the game ... owning more stocks and the possibility of quicker gains is why I chose to buy at this time.
The split makes the price of each stock cheaper, but the aggregate value remains the same. The cheaper price is significant on a percentage basis. So if a stock is valued at 100 bucks and it goes up 1 buck on a given day, it increases value by 1%. But if the stock splits in two, so each costs 50 bucks, then a 1 dollar rise increases the value by 2%. It's quite likely that the split stock would not rise by the same amount as the unsplit stock, to be sure.
Apple as a corporation is undergoing the same problem in regards to increasing its gains in receipts. I mean, when a company is worth as much as Apple is, any new product will raise its profit, but as a percentage, it won't be nearly as much as it was, say when the iPhone was introduced. It's hell to be successful!
_________________________ MACTECHubi dolor ibi digitus
it won't be nearly as much as it was, say when the iPhone was introduced. It's hell to be successful!
and iPhone 6 is coming in Sept too. Maybe in new form factors. And a new OS
iPod was initially snubbed by the financial world. iPad was lukewarm. I think Tim & Jony are going to introduce another market changing product. Of course stock will dive when they do, so maybe waiting to buy is a good decision <wink>
The days of Flower Power iMacs, Hockey Puck Mice and the Cube are long gone. Apple owns tech and all other hardware companies follow. Except for new monitors. What's up with that?
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