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.
Did I hit a nerve? It figures. Show something
their full of shit & they strike out like a
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.
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.
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only minimal taxes as it is withdrawn to pay for their
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
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
Good Investing, Ken
HD is an excellent LONG TERM stock to invest in.
I too have had HD since '95. The SPLITS are most
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
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.
from my wife's nail stylist that due to the 20th
Anniversary of HD, the stock will split 20:1
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
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
I've already learned a few things that I hadn't
Let me know what you think about HD.
forgot, here's the address to access the FREE
Just retype this with no spaces www. stockhomepage
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
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
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.
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