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Prices gap down after bonus issues

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  #1  
Old 6th December 2006, 10:19 PM
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Default Prices gap down after bonus issues

Generally, I have observed that the stock price gaps down almost equal to the bonus %, the day after the bonus issue is declared.
This completely wipes out the profit of having the bonus shares, so what's the point? and why does the price gap down?
Have I missed something here?
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  #2  
Old 6th December 2006, 10:29 PM
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Default Re: Prices gap down after bonus issues

Pasha

Are you questioning the logic of "issuing bonus shares" altogether or its seemingly "no impact" on the recepient?

cheers
-m
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Old 6th December 2006, 10:46 PM
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Default Re: Prices gap down after bonus issues

Quote:
Originally Posted by pasha View Post
Generally, I have observed that the stock price gaps down almost equal to the bonus %, the day after the bonus issue is declared.
This completely wipes out the profit of having the bonus shares, so what's the point? and why does the price gap down?
Have I missed something here?
There's no such thing like free lunch , my friend .

If a co issues bonus in the ratio 1:1 , and u think u have doubled yr investment overnight, you are missing something

See this thread http://www.traderji.com/equities/998...agilenthttp://

AGILENT
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  #4  
Old 7th December 2006, 12:21 PM
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Default Re: Prices gap down after bonus issues

Quote:
Originally Posted by manugoyal View Post
Pasha

Are you questioning the logic of "issuing bonus shares" altogether or its seemingly "no impact" on the recepient?

cheers
-m
Actually it does create a tiny upward and shortlived bias, which makes me wonder why anyone would buy into them.

Agilent, I just had a look at your link. Is it really true that there are no bonus issues in foreign markets?
Good point, it's better to think of the "bonus" as a split.
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  #5  
Old 7th December 2006, 12:52 PM
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Default Re: Prices gap down after bonus issues

Quote:
Originally Posted by pasha View Post
Actually it does create a tiny upward and shortlived bias, which makes me wonder why anyone would buy into them.

Agilent, I just had a look at your link. Is it really true that there are no bonus issues in foreign markets?
Good point, it's better to think of the "bonus" as a split.

Of course they do have ...

but they call them splits rather than bonus

AGILENT
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