Does Stock Price Matter?

[disneysteve]

Psychological factors are often pooh-poohed but there is a lot to the field of behavioral economics that points out that psychology is a big factor in investing. Just look at all the excitement every time the DJIA passes a threshold (10000, 11000, etc). And you will often see an index or a stock price find "support" at a certain number which often has no empirical significance except for historic precedent.

True. And stock splits are another good example. When a stock splits, new investors rush in to buy shares they "couldn't afford" before the split. Of course, they could afford them, just half as many for the same amount of money.