There are rumblings in the financial markets that Apple is considering a stock split so it can join the Dow Jones Industrial Average. But it’s hard to imagine that it will happen any time soon while the Samsung court case is in session.
If the stories are true, one can only wonder why it took so long for the most valuable company in the world to be included on the exclusive list of the top 30 companies in the world. And if it does happen, Apple will have the distinction of being included on all three major stock indexes; the Dow, S&P and Nasdaq. This could present some interesting arbitrage opportunities on the corresponding index futures.
If Apple does a split, what can we expect? Anything more than 6 to 1 will reset the stock price below $100 a share and spark untold numbers of retail investors, who are reticent to invest in Apple now because it is perceived to be too expensive. I personally think this is a dumb ass way to determine the relative value of a stock, but there are a lot of dumb ass investors out there.
Some traders are salivating over the chance to invest in the perceived safety of Dow-based ETFs, like the Diamonds (DIA). They figure with Apple added to the mix, there’ll be a bit more volatility. Only if we could get them to read the prospectus of these garbage products…that’s right, I said garbage!