mardi 29 janvier 2019

Best stocks and stock splits

Everyday, we realize that something doesn't work, even with the things in which we have some faith. For instance, I've lately realized that my best friend is perhaps not my friend anymore for no particular reason. He just doesn't seem interested in spending time with me anymore. But hey, life is a balance. Perhaps I've never had so few friends over the last 10 years but I've never had so much money. If my portfolio continues to grow every year, I'll probably have no more friends in a year or two. But, who cares. Who fucking cares about having friends?

On the stock market, there's also strange things that don't seem to work or make any sense. I'm talking here about stock splits. There's been stock splits with TJX, Ross Stores, Alimentation Couche-Tard, CCL industries and today, Enghouse Systems. We're talking here about la crème de la crème, mes amis. Yes, try to find better cream on the market and you'll find it pretty hard.

We all know that stock splits have no other use than create a lower price for ignorant investors who think that the price of a share indicates if it's pricey or cheap. In other words, these people invest on the stock market while ignoring the signification of a PE ratio. These people never realized that buying 10 shares at 100$/piece represents the same global price than paying 1 share for 1000$.

What it means is that even the best managers in North America manage their stock while thinking about idiots. They know that a percentage of people will be more inclined in buying their stock if it's price is 50$ instead of 100$. So, they accept that nonsense and, in a way, they encourage it, which disappoints me a bit.

If I was a CEO, I'd try as much as possible to have the higher possible price for my shares. In that regard, a reverse-split would be better in my opinion. I'd prefer to give 10 shares at 100$ to people who currently own 100 shares at 10$ each. Thus, you get rid of a percentage of speculators. 

How come a CEO wants to have a share artificially more expensive just because people buy it because of it's "low" price? 

2 commentaires:

  1. I don't agree with this phrase:

    "even the best managers in North America"

    It should be changed to:

    "even the managers of the best businesses in North America"

    TJX and ROST don't have or need great management. They just simply great businesses.