4 ms·

So that selection bias seems to project that buying before a share split is actually not an educated+good decision

• and-not-drew 5y ago
  I think it still is. I'm going to try to find a source, but I saw an analysis where they measured from a year before the split, the day the split was announced, and the day the split was executed all until one year after the split was executed and the returns on all of them beat the market as a whole. That being said, holding before the announcement performed the best.
  • Majromax 5y ago
    > I'm going to try to find a source, but I saw an analysis where they measured from a year before the split, There's a bit of time travel / survivor bias with this one. A company that has not beaten the market is much less likely to split its stock. In other words, if I know nothing other than that a company is splitting its stock, I can reasonably guess that it's shown good returns in recent history.
    • and-not-drew 5y ago
      Yeah, that was their whole point. Stock splits don't cause better returns, but the stocks with the best returns are more likely to split.