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Re: dmiller post# 247897

Thursday, 01/29/2009 11:11:20 AM

Thursday, January 29, 2009 11:11:20 AM

Post# of 432703
More shares equals more liquidity?

That doesn't make sense to me. Maybe this is another real world situation where common sense does not work, so let me explain my thoughts so that I can be educated.

Assumption 1 - If a stock were to split, there would be the same amount of shareholders each holding the same percentage of outstanding shares.

Assumption 2 - Buy and sell decisions are made based on a dollar amount to invest, not an arbitrary share number (except for possibly rounding the traded number of shares).

Based on these assumptions, if a buyer wanted to invest $400,000 in a stock, they wouldn't care if it was 10,000 shares at $40 or 40,000 shares at $10. They would still need to pry the same percentage and value of shares from the same shareholder base.
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