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It wasn't a stock split so the data with a gap to 8 is correct. There
is no discussion.
Jimmy
Thursday, February 3, 2005, 1:17:00 PM, you wrote:
MS> This has probably come up before, but here is a recent case:
MS> In mid-August of 2004, Blockbuster Inc (BBI), then trading
MS> around $13, paid out a cash dividend of $5 (almost half the value
MS> of a share!) to shareholders. Of course, the stock price dropped
MS> by an equal amount to about $8.
MS> Peter Worden of TC2000 subsequently adjusted his BBI charts.
MS> He writes, "For shareholders of record this entire transaction was
MS> obviously a wash. However, for anyone looking at an unadjusted
MS> price chart the result was a big downside gap - a drop in price
MS> which negatively impacted the technical indicators - a drop in
MS> price which obviously did not accurately reflect a true change in
MS> the value of the stock. For this reason, we have now adjusted the
MS> historical data for BBI, just as we would have done in the case of
MS> a stock split."
MS> The problem does not end here, though. For those who had been
MS> holding the stock at the time, the transaction was indeed a
MS> zero-sum game. New buyers coming in after the dividend payout,
MS> however, did receive shares whose intrinsic as well as extrinsic
MS> value was definitely $5 less than the day before.
MS> So TC2000 adjusted their charts so as to keep indicators
MS> undisturbed. So did Quotes-Plus. Other vendors such as Quote.com
MS> kept the gap the way it had manifested that day. It seems to me
MS> that both points of view have some value. What do listers think?
--
Best regards,
Jimmy mailto:jhsnowden@xxxxxxxxxxxxx
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