My ETF split 10:1

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Freaked me out this morning when I checked in and the share price went down to $17.00.

I thought I was supposed to get an obligatory rally after a 10:1 split. . .I didn't. It was up a little today but not much.

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Yeah, that caught me by surprise too.

At first, I thought something on my computer broke, because it was posting a 89% loss.

I was ready to dump everything else and buy SLV myself until I realized it was a only a split.

[disneysteve]

I don't think too much rallying went on today. Perhaps you'll see a bump tomorrow if the buyers move back in (and oil doesn't shoot up).

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I was debating whether I wanted to be the bearer of bad news or not but....

Stock splits don't cause rallies. At least I have yet to see one.

Reason being that most investors know it's still about the same amount of money.

However, it could garner support because some main street investors might look at it and think it's affordable to them. (Sometimes, I think individual investors get too fixated on the price, but that's a separate issue.)

Just FYI, but stock splits generally are not good signs.... It could mean that they are starting to lose momentum, and is attempting to garner support without costing much (such as raising dividends).

However, if I recall correctly, you said you were going long. So, I wouldn't worry about it. Stock splits in itself are not harmful either.

[disneysteve]

BA, while you and I know that a split means little if anything, a lot of people, especially small investors, view a split as a good time to buy more shares at a lower price. Many people would still rather buy 100 shares of stock at $10 per share than 50 shares of stock at $20 per share. Perhaps this dates back to a time when commissions were higher and you paid more for an odd lot of under 100 shares.

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Steve, I agree, and it's that kind of... faulty logic that companies are counting on to garner support.

However, it's extremely unlikely that large institutional investors would fall for such a simple ploy. And I believe they're the ones doing most of the volume trading, not us little fishes.

To be fair, perhaps I've painted too pessimistic of a view. In truth, there are other, more mundane reasons for stock splits, and in the end, they've caused little to no impact to the overall performance of the stock. Personally though, I see stock splits as a potential sell indicator.

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The reason for the split could be as mundane as wanting to set the share price to almost exactly what the the price of silver is per ounce.

If I recall, it's running around $17/oz.

[Like2Plan]

While the split has no affect on the value of the stock, I have always taken a split to be a good sign for future prospects. It costs the company money to accomplish a split and it would make no sense to do it if the stock were on a downhill slide.

About the only benefit I can think of is a split can keep the share price within an "affordable" range. If you already own the stock, it just adds to the record keeping and one more thing you have to account for when you are figuring out the cost-basis. ( Now that I think of it, I wouldn't mind at all having just 10 shares of BRK.A which I understand has never split. )