Stock split alone not enough to buy shares


MANY PEOPLE ask if they should buy a stock when the company announces a stock split.

Never buy a stock just because it's going to split. But if it's a good company and you buy the stock before it splits, you will save on commissions and probably show a profit, too.

The AAII Journal says: "Stocks of firms that announce splits generally move higher at the time of the announcement, generally advancing 3.5 to 4.5 percent. Investors feel a split announcement is a positive signal about future earnings. Overall, stocks of firms splitting their shares outperform those of similar non-splitting firms by about 7 percent over the post-announcement year."

IF ONLY... Here's what a $10,000 investment in January 1977 would be worth today: Wal-Mart Stores Inc. $6.8 million; Intel Corp. $3 million; Pfizer Corp. $1.1 million; Gillette Co. $867,700; Merck & Co. Inc. $732,000.

"Despite the popularity of 'Dow 36,000,' by James Glassman, Dow 3,600 is more likely, requiring only a retreat to a 12.5 P/E, well above the 1982 level in the last serious bear market." (Jeremy Grantham, market strategist)

"Stocks are overvalued by 35 percent, but I am still raising my stock allocation by five percent. Sure, the market's too high, but get in before it goes higher." (Aeltus Weekly, Barron's)

"Stocks will continue to climb because of rising profits, solid year 2000 earnings prospects and bond yields moving lower as economic growth slows." (Bob Brinker's Marketimer)

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