Markets aren’t entirely rational

One of the great proofs that markets – or we investors to be clearer – aren’t entirely rational is the idea of stock splits. There’s no reason that a company with 1,000 $10 shares should be more valuable than one with 100 $100 ones. But it does often enough turn out to be so as stock splits at both Apple and Tesla have shown.

There is a reason why a company with 100 $1 shares will be more valuable than one with 1,000 10 cent ones which is that NASDAQ and the like will cancel the listing of a stock trading for any substantial period below $1. So there is, or at least can be, a substantial reason why reverse stock splits, consolidations, can work in adding value.

And, well, we can all also trot out the reasons why splits might really add value and yet.

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