The theme this week on the Retirement Quick Tips Podcast is: Understanding Stock Splits

Today, I’m talking about whether or not it’s a good idea to buy companies who split their stock.

• Don’t add any real value - I’m going to trade you 2 oreos, you’re going to break them in half and give me 4 half pieces back. Nothing has chaged really, I have twice as many pieces of oreos but they’re half the size they were before. That’s a 2 for 1 stock split. 
• Make the stock more accessible to more investors at a cheaper price
• Signals the management and leadership at the company are optimistic 
• Many companies continue to do well and continue that growth trajectory after a stock split, but there’s no clear evidence that companies who split their stock do any better post-split
• 2010-2020: 240 stock splits
• Average return 1 month post-split = 1.5%
• Average return 6 months post-split = 5.25%
• Only about half of the companies who split their stock over this time period performed better than the S&P 500 over the short term

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the Retirement Quick Tips podcast. 

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Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance