Wednesday, October 5, 2016

The Rising Price of Stock Shares

The era of the stock split appears to be comping to an end. So far in 2016, only five companies in the S&P 500 stock index — and only 63 among more than 10,100 U.S. companies tracked by S&P Dow Jones Indices — have split their shares. This year is on track to be the third-lowest for stock splits in modern history, behind only 2009 and 2010, when companies were too traumatized by the financial crisis to dare lowering their share prices.

One result of this is that the price of stock shares has gone markedly higher. After decades of remaining in a range between $25 and $45, the average price of an S&P 500 stock has risen to a near-record $86 per share.

So you should get used to single-share prices that look like sizable investments. It’s not just Berkshire Hathaway, at more than $217,000; there’s also homebuilder NVR, at more than $1,640; Priceline Group, near $1,500; and Alphabet, the parent of Google, over $800.

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