092 - Do Stock Split Returns Outperform the Market?

You’ve heard us talk about stock splits before when we mentioned getting into Chipotle and Nvidia. 

Tim noticed that both of these stocks go back to their pre-split price and jumped on the opportunity to gain capital appreciation. That’s money we can roll back into dividend stocks. 

Talk about a no-brainer, but this sparked an idea.  

After digging into stock splits, we uncovered some pretty sweet data showing that this could be a useful strategy to grow your portfolio without hustling for extra cash. 

So learn how you can find profitable stock splits. 

Potential stock splits for 2025

• NFLX $1,016
• META $712
• MSFT $416
• AZO $3,467
• FICO $1,887
• COST $1,051
• ORLY $1,331
• SPOT $626
• HD $415
• DE $465
• CRWD $421
• LULU $412

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**DISCLAIMER**
Ticker metrics change as markets and companies change, so always do your own research. The content in this podcast is based on personal experience and is for educational purposes, not financial advice. See full disclaimer here.

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Transcript

Welcome to Roaming Returns, a podcast about generating a path of income with dividend stocks so you can secure your finances and liberate your life. You've heard us talk about stock splits before when we mentioned getting into Chipotle and NVIDIA. Tim noticed that both these stocks go back to their pre-split price and jumped on the opportunity to gain capital appreciation.
That's money we can roll back into dividend stocks. Talk about a no-brainer, but this sparked an idea. After digging into stock splits more, we uncovered some pretty sweet data showing that this could be a useful strategy to grow your portfolio without hustling for extra cash.
So let's show you what we learned and how you can find profitable stock splits. What's up, y'all? All right, guys, we are back for a new episode. Hopefully, you're excited because I was excited for stock splits, and Tim came up with the ingenious idea of waiting until Valentine's Day to do it because of Valentine's Day, and apparently Tim associates Valentine's Day with splitting because the majority of people split in the relationships.
The marriage rates, divorce rates, what, 57%, 55%, and then I'm assuming the relationship with outside of marriage is higher than 55%. You do a lot of splitting before you find the right one. We'll see.
This could be a split. Who knows? It's been like 10 years, more than 10 years. You would leave me because of the cats.
Yes, I love you because of the cats. You're stupid. You're stupid.
Okay, so I have no idea why I decided to talk about stock splits, but I found that it's actually quite interesting from the analytical perspective because once you dig below the surface and you start to see how stocks perform leading up to the date of the stock split and how they perform after they actually split, it's kind of interesting, but we'll get there. You should know there's two different kinds of stocks splits. Spock splits.
Splocks? Spocks? Spock. I can't do it. Spock splits.
I can't do it. I literally cannot. This finger is like attached to my, that one.
Mutant. There's two different types of stock splits. There's a forward split and a reverse split.
When you think of it, most of the time you're actually thinking, when you think of stock splits, most of the time you're actually thinking of a forward stock split. That's where if you're holding one share of a stock, the company says, we'll give you two shares for every one that you're holding, or we'll give you three shares for every one you're holding, or sometimes 100, sometimes 25, sometimes 10. There's no concrete number.
Because it depends on the company, right? It does and how much they're trying to bring their price down. We'll get to why they do it in a minute, but normally it's two or three, but there are instances where it's five or 10 or 20, pardon me, 25. Wasn't Amazon's 10? I think Amazon was 20.
Mm-hmm. Chipotle's was the one that was 10 then. Mm-hmm.
Oh. I remember it at 10 somewhere. So when you think of stock splits, what you're really thinking, most of the public is thinking of forward splits.
Now, there is a reverse split. That's where say you have 100 shares of a company, they'll take, they'll give you one share for every 10 shares you own, so they'll take a bunch of stock off the table, and there's a reason why they do that. We'll get to that.
But those are the two different types of stock splits. One's called regular stock splits, I guess. Forward stock.
Forward stock splits. And the other one, they usually just say stock split. There's a reverse split.
Reverse splits. Yeah. I personally, for me, I think reverse stock splits, they are, mm.
Bad juju? Yuck. That's the heartbreak. Some people, some people like them, but I'm not one of them.
Even the reverse split would be the other way around, wouldn't it? It's like backwards land. It is backwards land. So why exactly would a company perform a stock split? Okay.
There's a few reasons why they would do a forward stock split. There is, because the companies know of the, what the hell is that? The anchor bias, where someone doesn't want to spend more than $100 on a share of stock, and if something's trading at like $450, $500. Oh yeah, anchoring bias.
They'll actually split the stock so that it falls in the best trading range, so they'll actually, they want to keep their share price within a perceived best range, just based on psychological or institutional investing. And what that does for the company then, if they get new investors into those extra share pieces, the prices go back up, or they make more money. Generally, like we'll get, like generally, whenever they split, like when a good company splits its stock, like Nvidia or Chipotle, like the stock after split, after a few years will actually get up to upwards of where the company was before they split the stock, and then they'll have to split the stock again.
If you go through stock splits, you'll see that. There's a pattern. The majority of the ones doing the forward stock split have done it previously.
They just keep doing it. Well, it just keeps generating more money for them, right? Because isn't the higher the price of a stock, the more money? It doesn't get them any more money. Like what it does is actually, like in theory, like if you look at economics, if you have five eggs and you split it, and now you have 10 eggs, the price of an egg would be less.
Initially. You see what I'm saying? But then there comes a point where they're putting more stock on the table, so they're actually diluting the shareholder. Well, initially the price will go down, obviously, but I think like if the sentiment goes up, I think the company ends up making more money in the long run.
I don't agree, but okay. Okay. Maybe my brain's looking at that weird.
Company doesn't make any money from the stock, generally. I thought it's how they raise money, because that was the whole incentive. No, that's when they- Initial.
Initial. That's when they offer like- The initial offering. Share offerings.
Stock splits different than a share offering. A share offering is where they're actually- Share offering is where, say a company has two million shares, and they'll say, we're putting more shares out into the ether, and then the people will buy the million new shares in the company, you'll actually get money from that, but when you do a stock split, there's no money. Oh, okay.
So you're talking about like a secondary offering, or whatever the heck they call it? Yeah, a share offering. Oh, right. Okay, I'm confusing that.
My bad, guys. Did I not just say that? I thought I just said that. I probably am not the only one with a question.
I just woke up. Give me some slack. First point, psychologically, a best trading zone, trading range, whatever you want to call it, and they want to keep their stock price within that zone, because they think more people will invest in it, because it's in the gully lock zone.
That makes sense to me. The second reason why companies will do a four stock split is because lower prices attract more investors. Amazon, before it split, was at like 1,000.
Chipotle, before it split, was like at 2,000. So if they split it 20 or 30 shares, stocks per share, that's bringing the price down into like the $100 range, or the $60 range, or the $50 range, which makes it more affordable for more people. And a lot of times, the companies that do it don't actually do it for the regular investors.
They do it because they have a company stock option for the employees, and the employees like, so if you're getting like $200 in bonuses, and your company stock's worth $2,000, you're getting what, 0.1 shares? So they actually like to keep it so the company workers are getting like at least a share or two. Oh, that's interesting. I was also going to ask about, I imagine before Robinhood did the thing with the fractional stuff that carried into the other brokerages, I imagine the high-priced stocks made it even less able for normal people to buy into them, because they were so hard, because you have to buy a whole share in itself normally.
So if it's lower, like we talk about it all the time, how we don't want to buy the higher-priced stuff. I don't like to, generally, but like sometimes you have the choice. Yeah.
But I think people also have that concept. The third reason they do it is for liquidity, they have more shares out there, more people can buy their stock. So they're all kind of tied together, but now what I've seen throughout like the 20-some years of research I did for this is when a good company splits its stock, people pile into it.
People that don't hold NVIDIA pile into NVIDIA post-stock. That's exactly what happened. We did.
I did as soon as it, like the day that it split, I was looking at it waiting for a buy-in price and then like, I mean, we'll get to the numbers, like there's a way to do it. There's like a strategy to do it. But yeah, I got into it, both NVIDIA and Chipotle.
And I got out of a large portion of our triple-M position when they split. Just depends on like an individual investor, like your preference. Like I didn't want to be in a diluted triple-M, but I was only- Well, triple-M also cut its dividend, didn't they? It was well after it split.
But that's another thing that they're like, like do you have to keep, like she raises a good point that like if a stock pays a dividend, say like, say for example, Pfizer, but in this case triple-M, triple-M pays like a, at the time it paid like a 6% dividend. So when you split the stock off and you have all these other- New shares. New shares, whether it was a thousand or I'm sorry, a million or two million or a hundred million, whatever it was, you actually have to pay the dividend that you're paying to all those as well.
So it's actually going to drive your costs up. You're going to be spending more of your profit. So the 6% yield carries even when the stock split happens? Yeah.
They still have to pay the dividend to the stock. So they wouldn't cut it in half? Whoa. That would be pretty, well then it makes sense why they cut it.
So that's, when you have a dividend grower and it does a stock split, it's a good time to debate whether you want to be in or not because a lot of times they're not going to be able to afford the dividend after a post-split. So then you're like, do I really want to be in a diluted company that has like a hundred million more shares for a dividend that could be cut because they're not going to have the revenue to cover the dividend? And I think they maybe delusion of grandeur type deal and thought they were going to pay because they did pay it for a couple of months as you just said, right? And then they cut the dividend. And what's so crazy about that is I imagine the price went plummet after the dividend got cut.
So it had the split and then that and then boom. So I kind of think- If you get a chance, look at the triple M chart, you can see like it went, you won't see it pre-split because like all the charts are just like, they're automatically updated. So, but you'll see it with, it was at like $120 and it shot straight down.
That was when it cut its dividend and then it went straight back up. That was for, I guess, tariffs or America first or whatever's going on. It's at like $150 a share.
It's crazy. But we did keep some of our position in it, but like I did get out of- We got out of it in the van life portfolio, right? I got out of like a quarter of it when it announced the stock split and then I got out of like two thirds of what I had left, I got out whenever it cut its dividend. So we actually only have a quarter of what we used to have in triple M now.
I'm just letting it do whatever it does because we got our initial investment out. If you remember, mitigate risk by getting your initial investment out. So I got my initial investment out of triple M. So what's left is this is just going to do what it does.
I don't care. So question. The ones that you're looking at a little bit later, are they all regular growth stocks or dividend stocks too? We'll get to it.
Okay. Surprise me. I have a list of ones in 2025 that could split.
So if you're interested in what I'm saying here, then you can research each of them. Because that's a good way to make money. Okay.
We went over the liquidity. Like if there's more shares, there's more liquidity. So there's more trading going on.
The fourth reason they may split their stock is signaling theory. Stock splits serve as a signal from company insiders of positive prospects. What the hell does that mean? Executives might be indicating their expectations of continued growth and rising stock prices.
It's a psychological thing where like if we split our stock, we're doing some bang in business. So you should buy our stock after we split it. Because the company is so awesome that we can split the stock and afford the dividend.
Oh, so it's like a psychological thing where they think the price is going to go higher, which is why they split it or they wanted to offer it to more people or some nonsense. Ah, sneaky, sneaky. So that's a mind game they play.
Sneaky, sneaky. Signaling theory? Generally, it does go up, but it's not because of the signaling theory. Because it's a good company.
This is just a perspective. Like they want you to have the perspective that they're an awesome company, that you should invest in their lower cost per share stock now that it's split. The fifth one is attention hypothesis.
That means if you announce a stock split, it's going to be covered by the media and analysts and the experts, increasing visibility and potentially driving demand for the stock. And this does happen. I know when NVIDIA announced their split and I know when Amazon announced their split, the media just blew up and said, oh my God, they're doing it again.
And for a week straight on Yahoo Finance and CSNBC and Jim Cramer and all those, they were just talking about, oh, they're splitting their stocks. So this attention thing is a thing. Yeah.
It gets you hype, virality, whatever the heck. We all know what that does. I actually will go into a way where you can tune out the media and you can use your own eyes, your own peepers to see what has the potential for a stock split.
I'll give you some things to look for here later on in the podcast. So that is the forward splits. The reverse splits, if you notice, the forward splits is all from a place of strength.
None of the things I mentioned where the company is weak and they're floundering. Reverse splits, to me, they do a reverse split from a place of weakness, trying to have the facade that we're actually stronger than we are, but it's actually from a place of weakness. Okay.
So a company may perform a reverse split because they want to stay listed on an exchange. I'm not sure if you notice, but the New York Stock Exchange, NASDAQ, all these, they have like a minimum threshold. You can't be below a dollar.
Or they send the company a letter saying, hey, you're not ... Get your shit together. You're not in ... Or you're getting booted down to the Russell. What is the word? Is it the Russell? There's different, like the New York Stock Exchange B or something, like the JV team.
The JV team? It's not in compliance. It'll get the word out. They'll send a non-compliance letter to the company.
It took me a hot minute there. That you're not in compliance with our dollar or more. So you have to ... If your stock closes below a dollar for 30 days in a row, you get that non-compliance, and after six months, you haven't got back above the dollar at any point in that six months, you get booted off the exchange to the lesser exchanges.
So they'll actually do a reverse split because they do ... Is it really a dollar? I thought it was five. No, it's a dollar. They'll do a reverse split to bring their price above that dollar threshold for the six months so they can survive for another six months.
So like it's keeping their head above water. It buys them time. Keeping their head above water thing, hoping the company turns around.
But usually when companies do that, it just kind of goes to zero. That's penny stock land. Place of weakness.
The second reason that a company will do a reverse split is to attract investors. A higher share price can appeal to investors who might not buy stocks priced below $5. Priced in the penny stock range.
So if you do a reverse split and you bring your price from like $2 up to $20, you might be able to con some investors into buying your stock. You know, you are right about that. A lot of people won't buy something when it's like in that gray area because they ... Because technically ... I think a lot of the growth stocks we even looked at that some of the people we were talking to about buying ... I gave them crap for like clicking that every time we're on here.
It's super a pain in my butt. It's so loud. Penny stocks don't instill confidence in most investors.
Now there are a lot of people that will specifically invest in penny stocks, but most institutional investors can't. They can't invest in penny stocks. They have a lot of rules, regulations.
And then the individual ... Individual investors are scared because, oh my God, it's a penny stock. But penny stocks, you can make a butt of money. That's like when the crypto run, when you buy a token that's like .000008 and it shoots up to like .0005 and you have like a 500, 600% gain.
That's how penny stocks operate. Those tiny moves. And that's the thing.
If you get like a couple of hours stock, like when we got Aurora when it started- Aurora was a penny stock. Right now we have a penny stock in NPW. We have a penny stock in ... Archer was a penny stock when we got into it.
Terawulf is currently a penny stock and we're in all these because if you look at like what they're doing other than medical properties. But all the other ones, their growth is like at one point, Planeteer (Palantir) was a penny stock and at one point- I was going to ask you because we did that- Rocket Labs was a huge penny stock. Rocket Labs shot up like 2000% last year.
Yeah, that's crazy. But I was going to say that growth episode that we did back in, I think it was October. I think a couple of those were kind of like borderline penny stock if now we're in penny stock land.
And a lot of them went up like 60%. So I'm not worried about like ... Personally, I'm not worried about if something's a penny stock or not, but there are a lot of people that are and they would like to attract those investors. They'll take their share price out of penny stock land.
Yeah, but I think most companies start off- They start at like 20 or 30 when they do an IPO. And then they plummet. Sometimes 20 or 30.
Sometimes it's 50. I think if they get enough hype beforehand, they're fine. Or if it's a good company beforehand, they're fine.
But a lot of companies do- It takes a whole lot of negative skill to become a penny stock. But I think a lot of companies put their stuff on the exchange hoping to get money because that's the reason a lot of people list is to actually bring more capital in for their R&D or startup crap. I read that somewhere a while back.
I don't know if that's still the case for a lot of stuff, but whatever. So the third reason that they might actually do reverse splits is to create spinoffs. If you're not familiar with the spinoff, Triple M had a spinoff.
They had their regular consumer staple section and then they had their medical section and they spun the medical section off into something else. Well, they can actually, to create spinoffs, a company that's in the penny stock range, if they reverse the reverse split and they pull all the shares off and they shoot the price up to 30, they can then spin it off or be bought out by someone else. They fall in the same way.
So that's rare, but that is a reason that they may do it. And the last one is just to extend the life of the stock. The first one we mentioned, basically they'll perform a reverse split to extend the life of the stock so that they can, I guess, get more money and hope that things change.
I don't know. I don't know why. They won't extend the life of the stock if it's shit, but that's that.
I don't know. So now that we know why they do it, how do they work? Okay. So there are... Well, I would actually think a reverse stock split would be primed for short selling.
I don't know. There's main dates. There's two main dates.
A company will announce the stock split, and then they'll have a stock split, the date that it actually... Sometimes they'll refer to it as an X date, kind of like when you do an X day, they'll have an X date for the split date or they'll call it the post split date, whichever it is, but there's two main dates. A company will generally announce a stock split, but they won't always do it, but generally it's when they report earnings. They'll say in their earnings somewhere, hey, BTWs, by the way, we're going to give you a three for one by X date, or we're going to do a reverse one for 10 by X date.
So if you watch the earnings, majority of the time, you'll actually get the information... Well before most people, because most people won't read that stuff. It's shit. It's boring.
It's like... I can see why. If you could read a trip to the dentist office, it would be an earnings report. Boring and painful.
Yes. So the announcement will give a date for the split to occur. On the date of the split, the numbers of shares will either increase if it's a forward split or they'll decrease a reverse split according to what was announced in the announcement date.
The share price will also reflect the new total number of shares, thus making the price will correlate to if it was a forward split, the price will go down. If it was a reverse split, the price will go up. However it might be.
The market capitalization does not change. So that's something to remember. So when NVIDIA split its stock, it didn't go from a, I guess it was a $2 trillion company.
It didn't shrink its market cap and it was still a $2 trillion company, it just had more shares. Whereas if you do a reverse split, it's still like a $1 billion company, it just has less shares. Less shares, yeah.
The financial metrics don't change. Nothing changes other than the share count and the share price. So the dividend doesn't change, the dividend yield should be the same, the revenue they bring in should be the same, their debt should be the same, everything will be the same.
It just will have a different price. I know one time I wasn't paying attention and it's one of the things I was into, the reverse split, and I was like, well how the hell man, my shit went from $2 up to $30, I'm rich. And then I was like, oh wait, I only have like four shares now.
So I wasn't paying attention, so I got all excited for no reason, but that's neither here nor there. You got all excited and then a rug pulled out. The worst.
Okay, so here's an example of what the process looks like. On May 22nd, 2024, during the quarter one earnings, NVIDIA reported a 10 for one forward stock split that would become effective on June 7th, 2024. So during the earnings report in May, they said, hey, BT Dubs, we're rocking it so hard that we're going to give you nine additional shares for every share that you own.
That's like what that means is a 10 for one would be one plus whatever. So they said 10 for one, so you're getting nine shares for one share. And if it would have been 20 for one, it would have been 19 shares for one share.
I mean, hopefully most people understand basic math, but some people don't. They're like, I only got nine shares. It's like, well, it's a 10 for one and you had one, so that's technically, okay.
On June 7th, after the market closed, investors who held NVIDIA stock received nine additional shares. And that was Friday. So Friday after the market closed, NVIDIA's new share count went into effect.
And on June 10th, 2024, NVIDIA began trading at a post split price. Instead of $1,200 a share, NVIDIA traded $120 a share. Do you see how the math worked there? 10 for one took it from $1,200 down to $120 because there was all that extra shares infused in the market.
So the actual price went down a lot. Total shares went up 10x, but NVIDIA's market cap and financials and everything else remained the same. Their measly dividend of .03 or whatever was the same as well.
The other side of the coin, I'll show you what happens when they do a reverse split. Blue. Don't know what it is.
It's actually ticker blue. It announced a one for 20 reverse split on 12-4-2024 at its annual conference. So this one wasn't actually an earnings report.
If you don't know, most companies will have a conference once a year where they bring in all the bigwigs and all the shareholders that make it and everything. I guess it's just like if you rub elbows with the generals, I don't know. So they announced on 12-4 that on 12-12 they would have a reverse split.
So on 12-12-2024, investors who held blue kept one share for every 20 shares they held. So it was a one for 20, so they lost 19 shares. The share price of blue went from $0.38 pre-split to $0.760 post-split.
You see why they did it now? Because they were in that area where they were below a dollar. They were probably coming up on the, we're going to get delisted because we're not in compliance so we need to get our shit above a dollar. So if we do this reverse split, our share price will be $0.760. So total shares shrank by 20x and they did that, like I just said, to regain compliance with the NASDAQ.
Yeah. That would suck if you weren't aware that that was going down. Well, if you were at the conference and they said, hey, B-T-Dubs, we're going to take 19 of your shares for every 20 you own, we're going to take 19 shares, I'd be like, whoa.
They did that. I remember like back, if you don't remember back in COVID, there's this big to-do about how oil was trading negative. I bought oil.
I bought a company, a USO type of index fund oil for like $2 a share and as soon as oil rebounded it was at like $50 a barrel instead of like negative $20 per barrel. They did a reverse split and they took like 80% of my shares. I was like, what are you doing? Why? Why? Because what they did there, they didn't want to pay out the money so they just reduced it.
I know why they did it. They were being shiesty. Yeah.
That's kind of why we have issues with being in a lot of the oil stocks. They do shiesty shit. Okay.
I went back 20 to 25 years before I got bored. You can go back further if you really are a nerd, but it's up to you. Before a stock split, this is what history shows us.
Before a stock split, but after an announcement of a stock split, the stock set to split grows at 3% in the month or the weeks or however long it is up to the split, 65% of the time. So 65% of the time, if you go back to the video case where it said on May 22nd, hey, we're going to do a fourth split. Between May 22nd and June 7th, 65% of the time, that stock that announced that will go up 3%.
So they'll go up before it actually happens. Yeah. 3% a month.
That's interesting. After the stock actually splits, resource after resource, so I'm saying probably at least 15 resources. I mean, if you are a nerd and you want me to give you like where I got all this from, I can send you an email or whatever.
Resource after resource shows that the stock has a 12-month return of 25% to 30%, 80% of the time. So if you think about it, the market in general goes up 10% generally every year. So you're getting like 2.5 to 3 times more return plus the 3% before it actually does a split.
Wow. It's not all the time, but 80% of the time. So that's when you start doing your risk assessment, your probability-based stuff.
Okay. 80% of the time, if I do this, I'm going to have a 4 out of 5 times I'm going to have a greater return than the market if I do this. Well, and if you don't just willy-nilly pick stocks like Chipotle and NVIDIA would not be willy-nilly stocks.
Oh, I'm sorry. This is for forward splits. Okay.
Forward splits. My bad. Before a forward split.
What the hell did you say? I just said before a stock split. I didn't specify. Wow.
That's why I said in the beginning, usually when you hear stock split, they're referring to a forward split. So the forward splits, 65% of the time, it's 3% leading up to the actual date of the stock split, and then 80% of the time, it is 25 to 30 for the 12 months after the stock split. That's cray-cray.
In fact, if you look at each decade since 1980, this I actually got from Statista.com, four stock split companies have performed better than S&P each decade in the 12 months following the split. 1980s, a company that split its stock performed 26, had a 26% gain compared to the 14% from the market. Throughout the whole 80s, throughout the whole 90s, a company that split had a 36% gain for that 12 months as opposed to 17.8 for the general market.
So this is like, how do I explain that better? Say a company in 1993 said, hey, we're splitting our stock. It was found that they had a 36% gain as opposed to 18% for the market for the 12 months following that. In the odds to the 2010, I love that word, odds, it was 9.5% to a negative 1.1% for the market as a whole.
And in 2010 to 2020, it was 18.3 to 13.3. So it's not even close. If you can actually- Just buy splits. Buy splits, you're going to perform pretty well for like 12 months.
And yeah, after 12 months, then you have to decide, do I want to keep this because there are some companies- Dump it. Some companies, blah, blah, blah. Reverse side of that is kind of ass, but we'll go over it.
For reverse splits, stock splits, the period between the announcement of the stock split and the stock split date, the stock falls in price 4% to 5%, 70% of the time. And after the stock actually does the reverse split, the stock has above a 50% chance, 66% actually have a chance of negative return in the 12 months after the split. So the market's doing 10%.
And if you do a reverse stock split, there's a 66% chance that you're going to lose money that year compared to the market doing 10%. So reverse splits are just terrible. I mean, I'm sure there's a time and place.
If I was a short seller, I would look for reverse stock splits. That's what I was just saying earlier. I would just short the shit out of every one of these companies.
Every one of them. And the best part is- Because you have a 66% probability. So two times out of three, you're going to make money on your short sales.
And one time, you're going to lose money. So just don't make money. But you know what? Taking that momentum trading, which was all about penny stocks because of those smaller numbers and the moves, like you would get these surges and you take a snippet of the thing.
This would literally be a strategy in combination with momentum trading where you would basically lock in a guaranteed, in my opinion- Not guaranteed, but it's a- Yeah, but a short- Oh, man. Because usually if a stock- Well, you'd have to pick one that's right on that borderline, and they're trying not to stay in penny stock land. But if they go back into penny stock land, if you look at the statistics for penny stocks, like 90 some percent of them, high 90%, go to zero.
The reason I brought up the splits because if you do a forward split- I want to try it. Four out of five times. So four times you're going to make money.
One time you're not. Generally, you'd be based on statistics if you just invest in companies that do a forward split. I'm sorry.
Excuse me. And if you like shorting, then you're going to two times out of three, you're going to make money on a short selling a company that does reverse box splits. So this is about as good as you can get like probability-wise.
There's a lot that goes into short selling if you're not familiar with it. Like you have to have a specific brokerage that actually allows the shares to be able to be shorted. And then there's like cap outs, tap outs, margin calls, all sorts of stuff.
You get fees per every day that you're in them. There's a lot more going on. So don't just take that on willy-nilly.
But it's like something to think about. That's why any time I see a good company doing a forward stock split, I might actually just wait for the split and then just put money into it. Because I mean, four out of five is pretty good even considering the market.
They found since 1925 that a company loses money 54% of the time. That's crazy. That's absolutely crazy.
That's fantastic. I love when you have these little brainstorm things. Okay.
So now that we know all the good stuff, where would you look to find companies that are splitting stock? Yeah, because that is the question. Now that you know the trends and patterns. If you do a basic Google search and look for stock split calendar for 2025, that's a pretty good one.
But there's TipRanks, there's Motley Fool, Yahoo Finance, and MarketBeat all have stock split calendars. So if you go in there, it'll say there's a stock split for X stock on such and such date. We can go into MarketBeat and look at their stock split calendar real quick.
I hate MarketBeat. I do too. They're so scammy.
Okay. Today is 2... What the hell is today? Is it 2-16? Oh my. Ads.
Everywhere. Jesus. So you have here... Wait, no.
SNEX. Stone X Group. On 3-24, it's going to split.
It's going to give you for every two shares, you get an additional share. You have to be in it, I guess, up to... No, you have to be in it by 3-24. That's what the X date is.
What is this payable date? I don't know. Okay. Dividend, I guess, I don't know, but he's like, so this is this is the market beat calendar to show you all the reverse splits. If you're interested in doing like some short selling on some of the shit like that one, they're probably a pretty good one. Mullen Automotive.
Yeah. One for 60. That means that's a really shit company.
You have a pretty good, pretty high, pretty high problem with that is probably going to be finding a brokerage that will actually give you short, short sale or short shares. So like, so we'll show everything I was just mentioned about. So right here you see the X dates at three 24.
They announced this whenever they announced between now and three 24. Probability is that this stock is going to go up three percent. And after three 24, you're going to have an additional share and there's a probability of 80 percent that it's going to go up like 20 percent.
Now, question, did you notice the correlation when you were looking at the statistics of ones that would do like a 10 for one? No, whatever. They didn't break it down like that. I just broke it down.
OK, so you didn't actually see. So that would actually be further dig, dig deep if you want to are interested in strategy, perhaps. Or maybe Tim will go do this once he has a boredom moment.
But you see, like a majority of them are crap. Like you have these one for 60s, one for one for 150. That's a really another one.
One is short. Holy hell. But there's what it's like.
There's a. Oh, my God. See here, short interest, short interest. Yeah.
So I guess I think this is literally how people come and actually find stuff to short. And then it's a matter of getting shares because you have to have a brokerage that's willing to put up short positions. Google has one of those.
TipRank has one. Motley Fool has one. Yahoo Finance has one.
I find market beat to be the easiest because it literally brings up that list like that. But I mean, whichever you want, whichever like if, say, you're a paying member to tip ranks, well, then you probably want to go into the the tip ranks stocks book calendar. Yeah, because market beats a little scammy.
But so like this is something that you have to check back up on like a couple of times a month is to see if anything new has been added to the calendar. But like so once you have your calendar selected, check back every Saturday, every other Saturday to see what's upcoming. If you see a company you like, obviously you need to check the financials and the health of the company.
And I would say check in there as opposed to waiting to hear it in the news, because Tim was saying it goes up three percent leading up to it. So you're going to get into the higher price if it's one you're not in. So.
But you have to remember, there's a 33 percent chance that it will lose value from the time it announces a split to the time it actually splits. So like that's up to you. Like, are you willing to take a chance on it to 66 percent chance for a gain or 33 percent chance for a loss? I personally, I usually wait until after the stock split to see what the share price does the week after it starts trading X split.
I feel like you can probably tell, too, with all the media leading up to it, like NVIDIA and Chipotle's had insane. For example, we have picked up two stocks post split in the past year, NVIDIA and Chipotle, which we mentioned. NVIDIA traded X split on 610 and Chipotle traded X split on 626.
We picked NVIDIA up between 620 and 731. I picked a few shares up here and there. So like I waited 20 or 10 days to like a month and a half, depending on when the price fell down to the low side of the newest newly established range.
I picked up more shares. So our entry price was 124.47 in NVIDIA. I think it's currently like 130 something.
So we've made whatever, five percent or whatever it is, what it is. But I fully expect that one to gradually through time get back up to the twelve hundred dollar range that it was in. It's just going to take a few years.
But I'm cool with that because we got a decent amount of shares in NVIDIA now. Then we picked Chipotle up at 8.1. So you see Chipotle went 6.26 when it started trading post split. And I waited all the way to 8.1 before I picked shares up where I liked where the price was.
Our entry price in Chipotle was $54.15. And it's currently at like 58-ish. So they're not like we're not making like returns yet. But yeah, I think something happened with Chipotle, though.
I do think that there was something about them closing down the less profitable stores, which will hurt the share price initially. But long run, it's going to make them more profitable. So it'll be fine in the long run.
That one's a wait. So that's what I do. I wait for like I wait for it to go post split.
I'm willing to like not take a I don't want to take a one in three chance. I'm going to I'm going to lose money up to the stock split there. That's not for three percent.
That seems like that's not good enough for that bad math. Yep, that's not good enough. So I wait till after it splits and then I monitor the ones that I'm interested in.
And then I'll pick them up as the price is more favorable. But that's me. Other people might just want the three percent.
I don't know. YOLO. So then after I after going through all this, I said, well, what are some potential ones for splits in 2025 just for giggles? And there's I got a list of few here.
I have Netflix, which is trading at 1016. I think that would be a good one. I'm pretty sure that one's going to go.
It's going to split for the end of the year because there's so much institutional investing into that goes into Netflix. And they're probably going to do a I would just imagine a ten for one just because it's over a thousand. I'll bring it back down to one hundred bucks.
That's a nice round number. Meta is that when I did this is a couple of weeks ago. So the prices might be a little bit different.
But Meta was at seven hundred twelve. I could see that one doing like a two or three for one to bring that price back down to like the two hundred. I could see that one being a good one, too.
Microsoft's at 416. I could see them doing a two or two or three for one on that one, bringing it back down to like the hundred dollar range. AutoZone's currently around thirty five hundred and AutoZone's one that just split stock all the time.
I literally cannot even wrap my head around that one because AutoZone is like. So I'm assuming that's probably going to be a high number. It might even be like a 50 or 100 to one just to bring that price back down to I don't know, 30 to 70 bucks.
But it could be a ten for one to bring it down to three hundred dollars like so. I don't know. I don't know.
FICO's trading at 1887. That one's probably going to be a ten for one to bring it down to one hundred eighty eight. Costco is at one.
This is probably my second pick for the one to split would be Costco's at one thousand fifty one. If you don't know, a lot of people that work at Costco get stock as part of their as part of their compensation. So I could see them doing a ten for one to bring it down to one hundred dollars, maybe a five for one to bring it down to five hundred dollars.
I don't know. I don't know what the split ratio is going to be. I'm just guessing based on the share price.
O'Reilly is at one thousand three hundred thirty one. That's probably has a chance to do another split. Well, how do you know that these are going to go stock split? You don't.
Oh, these are the ones that you think are going to go. Yeah, I think they're going to go stock split based on the price. Plus they've had splits.
Spotify is six hundred twenty six. I could see that one doing a stock split. Wow, I didn't even know that one had a stock.
Home Depot is at four fifteen. I could see them doing like a two or three for one to bring that price back down to like Lowe's price range just because their direct competitor is Lowe's. John Deere is at four sixty five.
I mean, it was till earnings. It might be below that now. Crowdsource is at four twenty one and Lululemon at four twelve.
So I think any of those ones just keep your eyes peeled because they're pretty good companies that could be doing a stock split. But like I mentioned previously, if you are interested in trading stocks, but you have to keep up with checking to see like because I know you I don't ever know. Like you really have to check that calendar out to see or read the earnings reports of all these different companies if you are bored.
But I think those are ones that could go stock split in twenty twenty five or twenty twenty early twenty twenty six. I mean, what you could do is if they have it in PDF form, I don't know what they come in. They have it in PDF form.
You just do a control find and look up stock split. The one thing that I will say if you're doing stock splits, I would invest in my retirement brokerage account because your retirement you don't get taxed on and these things on capital gains and these things have the potential to do some serious gains. Oh, so he's basically saying if you don't have a retirement account set up like a 401k through your company, you should definitely consider putting or creating a Roth IRA.
Well, if you think about it, because like you get NVIDIA at one hundred dollars and it goes back up to, I don't know, twelve hundred dollars. You have all that capital gains you're paying tax on. And if you get a Roth, you never have to pay taxes on any retirement account.
Those capital gains wouldn't be taxed. So I would put my stock splits in my retirement accounts for anything that's not Roth. They get taxed in the future when you hit fifty nine and a half and start withdrawing.
If it's a Roth, that means you never have to pay taxes ever. Well, I think that's one thing we've actually never addressed. I think you should have a tax free account just for flyers that could go up a lot or stock splits.
And I will say the cool thing with Roths, especially the IRAs, because that's the personal ability to contribute without having to work for a company. Roths allow you to take out anything you put in that's already taxed, like the money. So if you put a hundred dollars in and you get a ten Xer and it goes up to a thousand dollars, you can take out the hundred dollars and leave nine hundred in there to play without penalty.
Yeah, but that's you know, like I'm not I'm not well versed in like a taxable versus non-taxable accounts. I just know that these type of like stock split growth stocks and growth stocks in general should be in an account that you're not getting taxed on because the potential for capital gains is so high that it doesn't make sense to actually have it as something that you. And if you're going to keep it for only 12 months and there's a chance that you're going to be below the year threshold, you're going to have the higher capital gains cost as opposed to the lower.
So I just literally spent three days doing Tim's taxes and looking at all that fun stuff. I don't even have my brokerage stuff from Schwab yet. That stock splits like in a nutshell.
If you have any questions, ask them. I'll answer the best I can. I'm currently putting together a fucking cool thing for you guys that when it gets done, it's going to be super awesome because I keep getting that when I'm playing basketball or when I'm online or like when I'm like out with people that know what I do, like in my free time, they ask me, where do I start? So I'm creating a thing lengthy.
It's going to be like almost a book like where you start. It's going to have like how you do things. It's going to go over all the stuff we mentioned like emergency funds and brokerages and limit orders and all this shit that we've went over like the last two years.
So what we're thinking about doing is because he's going to have a lot of like references to podcast episodes that we've already done. And I was thinking what we could do is go back since they've been like, you know, it's been a while since some of them have been done and we could potentially do like a 10 to five minute like mini podcast episode on each one of the subtopics. And then just when we go to do that blast thing, it's just like in order, it's not like a mini series.
It's for you guys, but it's mainly for me. So I can say, hey, just read this shit. Go to this link.
Just read this. Here's this QR code. Leave me alone.
This is going to be like a lengthy discussion. I'm trying to hoop. Get me on demand.
I'm busy. So, but like, it'll be something that'll be like, it'll be like a nice reference point for like a lot of the things like budgeting and emergency funds and trading stocks and brokerages and risk assessment and all that risk mitigation, all the shit that we've went over for like months and months and months. Now it's going to be like a crash course.
Remember like a remembering, hey, in case you've forgotten, here's this, this, this, this, this. It's going to be quite lengthy. It might actually, I don't know.
It could, it could conceivably be a book, but I don't know yet, but I'm putting that together. That should be within the next month or two. That's going to be on the website.
I imagine maybe it takes me so long to edit his stuff because it's so unorganized, but this is pretty organized. Yeah. Um, we'll see for next week.
I came up with a brilliant idea. Another one because humans are a week to week creatures, whether it be like, um, whether it be like paycheck to paycheck or whether it be a drinking or whether it be shopping or whether it be eating like a week to week, um, more week to week creatures. So I've established like just a little thing like, okay, so if you want to do quarterly dividends, you buy like these from our portfolio for the most part, there's one week I don't have one, but if you buy these, you'll get a paycheck every week in 2025.
Oh, so he's setting it up. So when we talked about stacking your dividends or what do they call it? Dividend laddering so that you get paid every month. Tim's actually taking it a step further and he's found ones that either pay weekly or they sync up to pay.
So you literally make a week. So I have, I have a section for quarterly, uh, the quarterly stocks are quarterly, uh, dividend payers where so every week you're getting a pay, a payment and whether it be a Friday or Thursday, then I have the monthly stocks. So every week you're getting a payment from the monthly stocks and then I have the weekly stocks.
So like I just, just set that up. So like, that's how you can make a shit ton of money on wheel. Like seriously, we have a hundred and with consistent weekly payout, we have 108,000 now in our brokerage account where we've been, we've been consistently getting above a hundred thousand.
We've been consistently getting between 1,500 and 2,300 a month. 20, we hit a 2,300 a month. Are you serious? I need to look at this when we're done.
I just got excited. Yeah. So like we've been consistently like on a smaller portfolio, been hitting quite a high threshold.
So like, it's pretty nice. And I figured, well, like people live paycheck to paycheck. Well, why not give them.
That's not including the yield max on my experiment, is it? Wow. Yeah. So like that, that's something that I'm put together for you guys so that you can, basically make money every week.
Cause I know like one of the biggest hurdles when it comes to investing is seeing your wins. And if you're seeing a win, if you're seeing a win, a significant win every week, this is a valid point. You're going to be, you're going to be more inclined to keep investing because you're like, oh, well this week I got $80 from ARLP and next week I'm getting $70 from EPD.
Well, if you keep stacking those wins up, you're going to be more inclined to keep pursuing investing. Plus the compound factor, the more frequency of payout helps you grow at an exponential rate. And then I'll probably at the end of that, I'll probably go through like, okay, so like our quarterly ones are the ones that we have the drip on and we don't actually touch the cash.
And then like the weekly ones, we take the weekly cash and we try to put it up into the quarterly ones, the quarterly ones grow. Like it's, it's fascinating mathematics and like a scientific approach to something that's so emotional, like going through everything, like going back through everything and typing this book thing up just to see like the sheer number of people that fail at investing because of emotion. Like I like to actually have the scientific analytical approach to it where there's no emotion into it.
It's just like, it's just numbers. So you'll see the numbers next week and it's pretty sick. So that's next week, getting paid every week.
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