Stock splits get many investors all excited, but in many ways they're really non-events. One reason companies split shares is so that the price will remain psychologically appealing. Reducing a stock's price makes some investors think (incorrectly) that it's a better value.
Sometimes, not splitting would mean that few people could afford even a single share. If, in its 80-odd-year history as a public company, Coca-Cola
Some companies split their stock fairly frequently, while it's a rare event for others. It largely depends on how rapidly the stock price is rising. Warren Buffett's Berkshire Hathaway
With stocks, just as with any purchase, examine what you're getting for the price. Study the company and compare the stock price to other numbers, such as earnings or better yet, cash flow. A low price might be inviting, but a $200 stock can be a better bargain than a $20 stock -- and can be an even better buy than a $2 stock. Remember -- a $200 stock can become a $400 stock, while a $2 stock isn't so unlikely to fall to $0.02 per share. If your funds are limited, you can just buy fewer shares of the company.
It's always fun to suddenly own more shares, but splits are like getting four quarters for a dollar. They're not cause for celebration.
You can learn more about investing in stocks in our Investing Basics area. Also, check out our Mutual Fund area and zero in on our index fund information there. If you'd like to receive several promising investment ideas delivered via email each month, learn more about our investing newsletters.