Ask the Fool Overdue for a Split? Why hasn’t Amazon.com Qsplit its shares recently? Is it due for a split soon? — G.K., Fool’s School in the past has been followed by My Dumbest Investment The Motley Fool Take Ocala, Florida an eventual recovery, and the stock The company “went public,” market has gone on to hit new highs. Not Rothing Good Years Ahead Aissuing shares on the stock The Stock Market Superinvestor Warren Buffett market for the first time via an has explained why savvy investors It Sooner for Goodyear? initial public offering (IPO), back Has Plunged — aren’t rattled by market downturns: in May 1997. It split its stock three “If you expect to be a net saver My dumbest investment move Goodyear Tire & Rubber (Nasdaq: Now What? was not utilizing the Roth portion GT) has been on a bumpy ride lately, times soon after, splitting 2-for-1 during the next five years, should of my 401(k) account earlier. A but there may be plenty of good in 1998 and 3-for-1 and 2-for-1 in In late February, the United you hope for a higher or lower stock Roth 401(k) grows tax-free! That years ahead for the company. Good- 1999. In the 20- years since States stock market took a bunch of market during that period? Many would have been a big-time win year is one of the world’s largest tire then, there have been no splits. blows, as — among other things — investors get this one wrong. Even for me if I’d started investing in a companies, with 47 manufacturing In early March, its shares were investors worried about the impact though they are going to be net Roth 401(k) with my company at facilities in 21 countries; world-class trading around $1,954. of the novel coronavirus on the buyers of stocks for many years to 22 years old — I’m 32 now. Take innovation centers (including its But the number of shares a world economy. The S&P 500 was come, they are elated when stock advantage of the Roth option. — innovation lab in Silicon Valley); and stock has isn’t too significant on down more than 10% at one point, prices rise and depressed when they K.M., online around 5,200 patents globally. its own. Two companies may each and may be down more by the time fall. In effect, they rejoice because The Fool Responds: You’re A plateauing and slowing North have a market value of $50 billion, you’re reading this. prices have risen for the (stocks) right that a Roth 401(k) — and its American light-vehicle market has pumped the brakes on Goodyear, with one having 1 billion outstand- It’s jarring to see investments they will soon be buying. This cousin, the Roth IRA — are pow- erful tools for retirement savings. with lower vehicle production ing shares priced at $50 apiece, and plunge in value by 10%, 20% or reaction makes no sense. Only those shrinking demand for tires. And its the other having 250 million shares even more. (The U.S. stock market, who will be sellers of equities in You’re also smart to be thinking about retirement while you’re just operation in China may be affected priced at $200 apiece. A company’s as measured by the S&P 500 the near future should be happy at by the COVID-19 epidemic. But index, dropped a whopping 38% in in your 30s; many people don’t get market value is far more meaning- seeing stocks rise. Prospective pur- around to that until a decade or two that’s only part of Goodyear’s story. ful than its number of shares. And 2008!) But should you freak out? chasers should much prefer sinking later, and they lose out on massive After all, Goodyear still gets signif- Amazon’s market value has soared, Not if you’re a long-term investor. prices.” (Ideally, they’ll have some saving potential. icant revenue through its replacement recently topping $1 trillion. Remember — this is how the stock cash on hand with which to snap up The longer your money has to tire business — as all existing cars It won’t be surprising if market works. Indeed, since 1950, great stocks at bargain prices.) grow, the more it can grow. Still, it’s occasionally need new tires. Also, Amazon splits its shares in the the S&P 500 has dropped by 10% If this short piece isn’t enough far from too late for you. If you’re more and more vehicles sport wheels with diameters of 17” or more, which coming years, if only to make or more dozens of times. It tends to to calm your nerves, spend a little aiming to retire at, say, 62, you still have a whopping 30 years of require tires that are far more profit- them more affordable for average happen every couple of years. time reading some classic books on able than those for smaller wheels. investors. If you wanted to invest Sometimes such events are short- investing. Look for titles by John investing and growth ahead of you. With a Roth IRA or 401(k), Meanwhile, if oil prices fall, so will $1,500 in Amazon and shares are lived; other times they mark the Bogle, Peter Lynch, Joel Greenblatt, the raw material prices for tires, beginning of a recession that can last you contribute money and get no trading for $2,000 apiece, you and The Motley Fool’s David and upfront tax break. But if you follow boosting profit margins. couldn’t afford a single share. But several years. Still, every decline Tom Gardner. the rules, you can withdraw money Goodyear has recently been if, say, the company split its shares from the account later, tax-free. trading at a forward price-to- 20-for-1, shareholders would That’s especially great if you earnings (P/E) ratio of around 6, suddenly have 20 shares for every Name That Company expect your tax rates to be higher which is very low, and its dividend share they owned pre-split, and in retirement. was recently yielding a hefty 6.6%. That warrants a closer look by long- those shares’ prices would be I trace my roots back Socking away $8,000 per year for 30 years and earning an average term, income-seeking investors. reduced proportionately (leav- to the 1849 beginning of Weak auto markets are generally ing the total value of their holdings annual return of 8% can get you pharmaceutical giant Pfizer — to almost $980,000. Learn more followed by stronger ones, and while unchanged). In such a split, shares the parent from which I was about IRAs and 401(k)s at you wait, Goodyear should keep costing $2,000 pre-split would sell Fool.com/retirement. paying dividends. for around $100 post-split — and spun off in 2013. Today, based in Parsippany, New Jersey, I’m someone with $1,500 could afford LAST WEEK’S TRIVIA ANSWER to buy 15 shares. a world leader in animal health, I trace my roots back to the 1866 founding of the Anglo-Swiss *** offering health products such as Condensed Milk Company and the development in 1867 of a What’s the Pension Benefit drugs and vaccines for house pets, baby food made with flour and milk. I grew over the years and QGuaranty Corporation horses, cattle, swine, sheep, poultry and added offerings such as . In 1938 I introduced a popular (PBGC)? — T.L., Mankato, even fish. I employ more than 10,000 instant coffee, followed by instant tea in 1948. Today, based in Minnesota Switzerland, I sport a market value that recently topped $320 people and sell my wares in more than billion. The brands I own or am licensed to sell include Gerber, It’s a federal agency that 100 countries. I have about 300 product , , , , KitKat, Coffee-Mate, Ainsures benefits in private lines and rake in over $6 billion annually. , , , Stouffer’s, DiGiorno, , traditional pension plans. Learn , Dreyer’s and Haagen-Dazs. Who am I? (Answer: Nestle) more at PBGC.gov. My unusual name is related to the words zoo, zoology, zoometry and zodiac. Who am I? Want to Invest? Email us at [email protected], and we’ll Want more information about stocks? send you some tips to start investing. Sorry, we can’t provide Send us an email to [email protected]. Think you know the answer? We’ll announce it in next week’s edition. individual financial advice.

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