Well should we? The blunt answer is NO, unless you have a pension that revolves around one of their stocks or you have invested years ago in their stock you shouldn’t really worry.
In fact the higher the share price the more likely the company is to split the stock and when that happens the share price is divided by the split, if we look at Apple, their current share price is 113.69, remember though that they split their stock by 7 so for every single share is replaced with seven shares of new stock, these though are no longer at the original price they are one seventh of the previous price.
Google, er Alphabet, currently sits at just under $800 per share, this is post split. So we could presume that if they had not split the stock and made a 2 for 1 swap then Google would have been over $1000 a share. The value of the company though remains the same after a split and it is purely the number of shares that dictates the share price based on the perceived “by the market” value of the company so for example;
Company A has a publicly traded share valuation of $50 and there are 500 shares then the company’s valuation would be $25,000, if they do a two for one split the there would be 1,000 shares and the share price would drop to $25 a share.
Furthermore if you take into account that every time an Analyst that works for a broker, a bank or big insurer/pension provider, spouts crap out of their mouth it tends to be with the intention of creating a bull or bear effect on the stock of the company they are squiring rumors about and if you listen long enough to just one of them they will say one thing and then day, weeks or months later will say the opposite. It benefits their employer to have someone working for them to pump the market or deflate it as they need it. They may only sway the share price by a few cents by getting some people to invest in the company they already have stock in but when you are dealing with hundreds of thousands or millions of shares in a company the benefit of buying cheap, pushing the price up with rumors and then selling (and deflating the value due to a large sell off of shares), it also benefits them to be able to persuade just enough people to sell shares in a company they desire by providing a negative outlook. They don’t just rely on dividend’s as a product of their ownership of shares in the companies.
If you think that this is not the case then you just have to look at Apple as a perfect example. For all the years after Steve Job’s returned to Apple and the shares were penny stock, they were literally junk stock, there was no dividend, no reward for owning shares and in fact Steve Jobs was of the opinion that if shareholders wanted a reward they should buy Apple Stock when it is in a lull and sell when it is at a high as an income and from 1997 until 2012 when they started giving a dividend on the shares. Yes, it was not until Tim Cook took over and bowed to the pressure of shareholders who wanted a return on their investment from the bulging coffers that Apple then had.
Even now swaying the Apple stock pricing and buying or selling is still the most efficient way of making an income rather than rely on a dividend.
But what about those Analysts that try and predict the net iPhone or the net iMac features?
Sure the analysts do this but again, it is purely to inflate or deflate the Apple stock pricing by getting others to sell or buy stock in Apple. We’ve all heard some of the wildest rumors that have come from Analysts and sure one or two do research and have insider information but many just throw spaghetti at the wall and wait for something to stick. If you think this doesn’t happen, look at some of my successful predictions and things that I have just guessed and made wild guesses but they’ve either stuck and others have also claimed to have gotten this ‘insider’ information that has just been made up while some of those flights of fantasy have turned out to be spot on. I don’t have any insider information, I just look at what I think Apple should do. When I told people that there would be an ARM based coprocessor to deal with security etc that was purely an assumption that Apple would look towards fingerprint unlock so that Apple Pay could be done without having to have an iPhone to do a fingerprint verification because it was already announced that Apple Pay was coming to websites. The only secure way of doing fingerprint is to have a dedicated ARM based chip to handle the fingerprint process and store it onboard in an enclave separate from the rest of the device. It wasn’t because someone at Apple told me it was going to happen, wasn’t because someone in the supply chain said they had components but purely because if I was Tim Cook or Jony Ives I would have decided it was the best way of making Apple Pay easier to use on a Macbook.
In fact I’d go as far as to say that the iMac’s will be launched with a replacement for the power button on the back that includes a fingerprint reader to add this functionality I doubt that we will see an update to the magic keyboard though to accommodate the same functionality for the touch screen replacement of the function keys.
Either way, thanks to my two readers.