Ask the Fool

What goes the term "split-adjusted" mean?

-- V.T., Bellingham, Wash.

It reflects a stock price that has been changed to account forstock splits that have occurred over time.

Consider Coca-Cola. It went public in 1919 at $40 per share andhas split its stock 10 times since then. Its stock price hasrecently been trading for around $50 per share. So have the sharesappreciated by only $10 since 1919? Far from it. Remember theeffects of splitting. With each split, you end up with more shares,worth proportionately less. (A 2-for-1 split, for example, gives youtwice as many shares, each worth half as much.) One 1919 $40 sharehas now become 4,608 shares. If the stock had never split, eachshare would be worth more than $180,000 dollars and few people couldafford to buy even one!

You'll see the term "split-adjusted" when reviewing historicalstock prices. For example, in August 1970, Coke's stock price wasroughly 55 cents, split-adjusted. The price was actually around $72per share then, but to compare it with today's price, you need toadjust the price for splits that occurred between then and now. Thatway, you can tell at a glance that Coke's shares haven't fallen from$72 to $50 since 1970, but instead have risen from the equivalent of55 cents to $50 a ninetyfold increase.

What does it mean when a stock is "oversold"?

-- L.R., Newark, N.J.

The term suggests that too many people have been selling it,sending the share price lower than it perhaps should be.