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The Home Depot, Inc. Message Board

  • wilanel wilanel Aug 22, 1999 1:17 PM Flag

    splits

    The argument that stocks gets more reasonablly
    priced for someone with "not a lot of money" was totally
    valid 10 years ago. Brokers used to charge additional
    commissions for shares purchased below a 100 shares. That is
    no longer the case. As a matter of fact, the
    opposite is now true. Schwab for example, charges 29 bucks
    for purchases up to 1000(including below 100 shares)
    shares and then it goes up an additional 3 cents a share
    for each share over 1000.

    Assume one wanted to
    buy $60,000 of HD stock before and after the
    split.Before the split, he gets 1,000 shares with commissions
    of 29 dollars. If he purchases after the split, the
    commission doubles (2,000 shares) and he still gets $60,000
    invested in HD.

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    • Did I hit a nerve? It figures. Show something
      their full of shit & they strike out like a
      rattlesnake.

      Be a big boy/girl & just admit you blew
      off about something you don't know a damm thing
      about. Really, it won't hurt. In fact, it just might
      make you feel better.

      Your response...."a tiny
      microscopic dick" is a VERY weak response; especially when
      you get the straight scoop & don't appreciate someone
      getting you on the right track. Whether you believe it or
      not, I did you a favor & I didn't even charge you my
      usual fee for the information I passed on to you. Think
      that brain surgeon will "do it" for free?

    • GW, I am in the same boat as you. My wife worked
      at HD for 5.5 years and we particpated in their ESPP
      to maximum extent permitted. Over this 5.5 years, we
      accumulated a significant holding in HD which is
      approximately 50% of our portfolio. The way we are approaching
      this is that we simply cannot justify purchasing any
      more HD stock, however, I am not going to sell it
      either. My advice is to hold the position you currently
      have in HD and dedicate your future investing to other
      solid companies that you can also hold for many years.
      As you have seen with HD, holding a stock for
      several years can be very profitable.

      Village
      Genius

    • gw,

      Very nice increase. A "problem" most
      would envy. I have not been in HD as long, but I know
      the good side to that problem too.

      Nearly all
      of my investment in HD is in either my kids college
      funds or in a Roth IRA. So for me there is not the
      taxable event that you are probably looking forward to.
      Yeah, when I converted to Roth last year, I am
      obligated to pay increased income taxes over the next 5
      years. But the growth from last year onward, will never
      see any more taxes. The kids education fund will see
      only minimal taxes as it is withdrawn to pay for their
      educations.

      I don't know your age or your family situation, but
      if you have kids, you can gift them the stock and
      they will assume your original tax basis for the
      stock. They will pay the taxes when they cash them in.
      They get the money to pay for education which you
      probably would have to pay for and you do not see a tax
      hit.

      But I also know that your question is
      more directly related to your concern of the
      proportional weighting of any one stock in your portfolio. I
      have that "concern" too. But when you step back and
      realize that this is one of the most steady and reliable
      growers of any stock out there, what strategy could or
      would make your situation appreciably better? Take it
      out of HD and put it into another stock of greater
      risk or far less return? Take it out and put it in
      some other safe instrument but at a far lesser rate of
      return? This all entails large tax burdens along with not
      much greater security.

      Your could buy put
      options as a downside hedge to protect the larger portion
      of your accumulated assets. Fortunately I have not
      felt the need or urge to do so; and I will consider it
      only if there is a significant prospect looming of
      fundamental changes in the company...to date I see none. So I
      just hold tight and continue to enjoy the huge annual
      increases.

      Good Investing, Ken

    • HD is an excellent LONG TERM stock to invest in.
      I too have had HD since '95. The SPLITS are most
      welcomed.

      My philosphy with this stock is simple. If it drops
      25% from its HIGH of a 52 week period, BUY more. If
      it splits and looses 25% of its split price BUY
      more. This has been it's history since I have invested
      in it.

      With the roll-out of the Expo line of
      stores and HD's efforts to eliminate the middle man, the
      bottom line will only grow and grow.

      BTW....heard
      from my wife's nail stylist that due to the 20th
      Anniversary of HD, the stock will split 20:1

      Stay LONG
      and Prosper!

    • From reading posts, I see that many people have
      bought and hold HD for the long term. I bought home
      depot in 1988 and as you can imagine it has done very
      well. At this point, it is a large % of my portfolio
      (over 50%). Wanted to see if others were having this
      same problem (Don't get me wrong, this is a good
      problem) and what they were doing about it.

    • Pretty interesting stuff on the latest research
      report.

      I was wholly unaware of some of the details of
      their business and some of
      the ways that this
      company goes about things.

      Take a look at the
      research report and see if you think that this latest

      report is on target or not. What does the analyst stand
      to gain from this?
      Is the price target on the
      money?

      I've already learned a few things that I hadn't
      known.

      Let me know what you think about HD.

      Almost
      forgot, here's the address to access the FREE
      report

      Just retype this with no spaces www. stockhomepage
      .com

      Good luck!

    • well said and I would agree with this logic

    • Hinmon, I agree with you that there are several
      schools of thought regarding investing, and at some point
      everyone must sell otherwise what is the point of your
      investment (i.e., even CEO's must sell from time to time
      because you buy tangible goods with cash not stock).
      However, the phenomenon we see today where a two-month
      hold is considered long-term by so many "investors" is
      wrong. The term investment implies that you believe in
      the long-term prospects of the company. There is
      another word for short-term players and that is called
      speculating. Everybody loves to speculate from time to time
      for the hope of the big kill in short time frame,
      however, if one dedicates to much capital to chasing the
      big kill, more times than not they will end up a
      loser. I myself try and purchase companies that have a
      good track record, I understand, and make money. I
      belive these are the types of companies you can buy and
      hold for many years without having to lose sleep at
      night.

    • village genius hmmmmmmmm, I understand your point
      but its rather narrow minded to NOT realize that
      there is MORE than one school of thinking in long term
      in investing---the buy and never sell IS just
      one(which could be debate itself)......and as far as stock
      splits the same is true, more than one school of
      thinking----oh yes and many WINNERS

    • VG,

      Your theoretical evaluation of a split
      is dead on. There is no change in the real value of
      a company as a result of a split. However, in the
      investing community there is a perception shift of
      valuation that takes place as a result of a split. And in
      most cases it is justified...

      The Board of
      Directors (the insiders who are in the know) normally won't
      split a company in times of fundamental weakness. Nor
      are they prone to split a company in times of
      financial uncertainty in the company. The most likely time
      of a split is when the BOD has an overwhelming
      confidence that the company will continue to grow into the
      forseeable future. This is usually a very strong vote of
      confidence by the BOD of the strength of the company and
      therefore its stock price. That is the perception (vote of
      confidence) that most investors need to buy or hold the
      stock...especially when there are macro-economic factors (like
      interest rate hikes) which would tend to shift those very
      same investors out of other perceptively weaker stocks
      and into defensive issues like Home Depot.

      So
      the long and short of it is, that while splits do not
      actually cause the stock to rise, splits are in fact, the
      end result of the same factors which do cause the
      stock to rise in price...the overall strength of the
      company and the recognition by the investors that the
      Board of Directors is confident of the continued
      strength of the stock.

      Good Investing, Ken

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HD
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