WRONG!!! (and quite arrogant-sounding)
A "simple" split does nothing to a company's total equity value and
therefore nothing to the supply/demand balance. If you divide the share
price by four and multiply the number of shares in circulation by the
same factor then the market value of the total outstanding equity
remains unchanged. It may affect liquidity slightly, but in most cases
the average daily volume will just go up by the same factor (i.e.
everyone now buys 4 shares for every one they used to buy...net effect,
no change)
What a split does is alter the *perceived* value of a company...and
perception, as your post proves, is important for marketing purposes.
Some people don't feel comfortable buying shares that trade +$100...a
$25 share price is often an easier sell.
The same argument also for new stock issue...so called "dilution", which
you probably also don't understand. It's what the company *does* (or
proposes to do) with the new cash that affects the market value, not the
raising of cash itself, since issuing new shares (i.e. increasing the
company equity value) has a net balancing effect by the new cash raised.
So one side of the balance sheet is countered and netted out by the
other. When the cash is spent, or when the company announces how it
intends to spend it, is when the market will respond...i.e it will
decide if there is good investment or bad.
Anyway, the point is that back-adjusting the price to account for a
spilt is a perfectly valid thing to do, since all you are doing is
mapping out how the market perceived changes in the *total* market
capitalisation over time. The absolute share price is much less relevant
than what it actually represents at any given point in time.
Andy
Rakesh Sahgal wrote:
A "simple 4:1" split as you so dismissively refer to it, enhances the
a company's equity by a multiple of 4 and also the quantum of float
that is moving around in the market, though not necessarily by the
same quantum. That my friend, changes the demand-supply dynamics of
the company's stock as also the perceptions of the market participants
about it. Which I hope you will be kind enough to concede will start
impacting the price movements too. So in summation yes a split
warrants new trend lines. However if you want to stick to an analysis
that was relevant to a situation that existed in the past, and not
re-do the analysis in the light of the changed situation, all you have
to do is let the old trend lines remain.
R
On 4/28/07, *Prashanth* <[EMAIL PROTECTED]
<mailto:[EMAIL PROTECTED]>> wrote:
Hello,
If you use AFL coding to draw the trend lines, it gets changed
because after you split, new Highs and Lows are used to write new
trendlines.
But if you have inserted a trendline manually btw the low point
and the high point, how do you think the software will know about
it. You are actually drawing a line btw two points in terms of
value. No matter what happens to the chart, the line remains
static without any change. If you have a scrip which has been
split, you will have to re-draw all trendlines afresh.
Cheers
Prashanth
----- Original Message -----
*From:* Dennis Brown <mailto:[EMAIL PROTECTED]>
*To:* [email protected]
<mailto:[email protected]>
*Sent:* Saturday, April 28, 2007 5:35 AM
*Subject:* Re: [amibroker] Re: Trendlines displaced after split
A bit heavy handed of a reply IMHO --DId you really read the
question?
I am generally impressed by the helpfulness of the posters on
this
board --you must have had a bad day today.
The help does not tell how to get study trend lines automatically
included in a split operation, or even if it is possible.
I tried this out on a sample, and the trend line was not
adjusted, so
the previously trend line was hanging in the air.
The AB split operation is still a bit of a mystery to me. Doing a
backfill operation after a split gets me confused real quick.
Deleting a symbol that was split and then adding it again is
just as
confusing. I end up doing a lot of undoing of splits by reverse
split. I have not looked into what I or AB might be doing
wrong yet,
but it is not intuitively obvious to me. I have not done an
exhaustive search for answers about split at this point.
Dennis
On Apr 27, 2007, at 4:26 PM, dingo wrote:
> Let's see now... You opened the help file; clicked on the Search
> tab; typed
> in "split" without the "'s; clicked the List Topics button
and you
> didn't
> like the first answer it gave you?
>
> And the answer to your question is NO.
>
> d
>
>> -----Original Message-----
>> From: [email protected]
<mailto:amibroker%40yahoogroups.com>
>> [mailto:[email protected]
<mailto:amibroker%40yahoogroups.com>] On Behalf Of ruthieflodberg
>> Sent: Friday, April 27, 2007 3:54 PM
>> To: [email protected]
<mailto:amibroker%40yahoogroups.com>
>> Subject: [amibroker] Re: Trendlines displaced after split
>>
>> Are you supposed to redraw every singel trendline just
because of a
>> simpel 4:1 split, to get them back in place? Can somebody
>> tell me that?
>>
>>
>> --- In [email protected]
<mailto:amibroker%40yahoogroups.com>, "ruthieflodberg"
>> <[EMAIL PROTECTED]> wrote:
>>>
>>> After a 4:1 split my trendlines are completely displaced. Does
>> anyone
>>> know how to solve this?
>>>
>>> Best Regards
>>>
>>
>>
>>
>>
>> Please note that this group is for discussion between users
only.
>>
>> To get support from AmiBroker please send an e-mail directly to
>> SUPPORT {at} amibroker.com <http://amibroker.com>
>>
>> For NEW RELEASE ANNOUNCEMENTS and other news always check
DEVLOG:
>> http://www.amibroker.com/devlog/
>>
>> For other support material please check also:
>> http://www.amibroker.com/support.html
>>
>> Yahoo! Groups Links
>>
>>
>>
>>
>
>
>
> Please note that this group is for discussion between users only.
>
> To get support from AmiBroker please send an e-mail directly to
> SUPPORT {at} amibroker.com <http://amibroker.com>
>
> For NEW RELEASE ANNOUNCEMENTS and other news always check DEVLOG:
> http://www.amibroker.com/devlog/
>
> For other support material please check also:
> http://www.amibroker.com/support.html
>
> Yahoo! Groups Links
>
>
>
