[Boomer]

Before anyone starts explaining to me that a stock split does not mean the stock you own is worth more, and that a split means only that you have more shares at half (or whatever the ratio is) of the pre-split price, I know that.

But there is a psychology to a stock split. Stock splits can let in the small, individual investor and stock splits can be educational.

Apple’s 4-for-1 split, in 2020, has been followed by its 52-week range of $103.10–154.72, closing yesterday at $153.54. Apple dropped, at first, after its split.

Procter and Gamble (a behemoth that has been belching out dividends for 131 years and increasing those dividends for 65 consecutive years, with the most recent dividend increase at 10%) has not split since 2004.

PG’s most recent 10% dividend increase probably included a bow to the bears. Every time I see those ads, I cannot help but think of how those highly paid PG advertising people hit upon using bears in those ads. I don’t really know why bears -- I can guess though. . .but I digress. . .back to stock splits. . .

PG is not known to take the investor on a rocket ride. I have casually observed that it tends to bubble around in about a $5 range and then decides to go on to hang out in the next $5 range – but my observation is casual, certainly not professional and could no doubt be argued by somebody with a formula or whatever. But I don’t obsess about it. I just keep thinking PG needs to split again. The share price is higher than it has ever been. But they don’t ask me. (sigh)

I just read that GE is doing a reverse stock split. I had never heard of such a thing. The collapse of GE stock was sad to see. It was once a boring, old, dependable investment. I can remember a 3-for-1 split years ago when its times were good. But then came the dividend cuts, etc., etc., etc.

And, now, GE has announced this reverse stock split thing. My first reaction was that a reverse stock split seems analogous to a codpiece -- like men wore in the time of Shakespeare.

Back to the psychology of a stock split -- that companies used to do more often when the stock price had been increasing for a while. . .

When a share price comes down due to a split, it can be a good time to jump in as an individual investor – if you are comfortable with owning the company because you understand what they do, and how and why they do it, and whether the future of the company looks solid. . .

And when a stock splits, it could be a good time to buy a few shares for a child or grandchild so they can watch and learn about this thing called the stock market.

I have read that stocks are not splitting like they used to because companies find a higher stock price to be prestigious. I have also read that the finance industry leaves the small, individual investors out because – who needs ‘em.

Perhaps the logistics of stock splits are expensive to a company and they do not have to do it anymore because investing styles have changed so much. . .

Investing styles have changed a lot this century. There are fewer investors who like to choose their own stocks. Index investing is very popular. Financial advisors are everywhere now. The internet has given us the chance to do our own thing, but making stock choices is not for everybody. The days of squinting at the print in the daily newspaper, and watching stock prices roll across the screen on the evening news, and paying a broker are long gone, so. . .

Maybe stock splits don’t happen as much because investing styles have changed so much. Who knows.

But getting back to that thing I have about stocks as an educational tool for younger family members, one of Warren Buffett’s famous quotes applies. . .

“Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Boomer (who is not a financial professional and could be just some retired high school teacher who thinks about stock stuff)