In a reverse split, what happens to odd lots?
Usually five shares and some cash. There are two reasons to do a reverse split.  Those partial shares will then be turned into cash and returned to the investors. For large institutional investors such as mutual funds or pension funds it results in only a small amount of cash because the fund has merged all the investors shares together. If the company is trying to meet the minimum price level of the exchange they have little choice. If they don't do the reverse split they will be delisted. If the goal is to reduce the number of investors they are using one of the methods of going private: A publicly held company may deregister its equity securities when they   are held by less than 300 shareholders of record or less than 500   shareholders of record, where the company does not have significant   assets. Depending on the facts and circumstances, the company may no   longer be required to file periodic reports with the SEC once the   number of shareholders of record drops below the above thresholds. A number of kinds of transactions can result in a company going   private, including:
You can't own fractional shares. If the Reverse Split resulted in you having less a full share (for example, if you had 500 shares, and they did a 1000:1 reverse split), your fractional share was cashed in (sold). That could be that 'money market' activity shown on the next day? It is your responsibility to be prepared for a reverse split, by either selling at your desired price, or buying more shares, so you end with an integer number of shares after the reverse split. This IS a stock split. http://en.wikipedia.org/wiki/Stock_split Ratios of 2-for-1, 3-for-1, and 3-for-2 splits are the most common, but any ratio is possible. Splits of 4-for-3, 5-for-2, and 5-for-4 are used, though less frequently. Investors will sometimes receive cash payments in lieu of fractional shares. This is how capital shares in split capital investment trusts work they never get any dividend they just get the capital when the company is wound up One way that is common is to show the value over time of an initial investment, say $10,000.  The advantage of this is that it doesn't show stock price at all, so handles splits well.  It can also take into account dividend reinvestment.  Fidelity uses this for their mutual funds, as can be seen here.  Another option would be to compute the stock price as if the split didn't happen.  So if a stock does a 2:1 split, you show double the actual price starting at that point. If you had an agreement with your friend such that you could bring back a substantially similar car, you could sell the car and return a different one to him.  The nature of shares of stock is that, within the specified class, they are the same.  It's a fungible commodity like one pound of sand or a dollar bill.  The owner doesn't care which share is returned as long as a share is returned.   I'm sure there's a paragraph in your brokerage account terms of service eluding to the possibility of your shares being included in short sale transactions. / in relative to the Tesla's performance, and current inflation.  They can split and reverse split at anytime the board decides without any regard to inflation or performance.   OP points to Tesla at 350- he doesn't point to PE. It makes no differences what the price of one share is. If they split 10 for 1 it would be 35- but what difference does that make- the PE remains the same. OP does not understand value- only price. GT BIOPHARMA, INC. ANNOUNCES REVERSE STOCK SPILT AS PART OF OXIS-GEORGETOWN PLANNED MERGER LOS ANGELES, CA / ACCESSWIRE / August 21, 2017 / GT Biopharma Inc.   (formerly known as Oxis International, Inc.) announced today a   1-for-300 reverse stock split. Shareholders of GT Biopharma Inc.   (OTCQB: OXIS and Euronext Paris: OXI.PA) will be issued 1 share of   common stock for every 300 shares common stock that they owned. If you owned fewer than 300 shares, they cashed you out. "The margin money you put up to fund a short position ($6000 in the example given) is simply a ""good faith"" deposit that is required by the broker in order to show that you are acting in good faith and fully intend to meet any potential losses that may occur.  This margin is normally called initial margin.  It is not an accounting item, meaning it is not debited from you cash account.  Rather, the broker simply segregates these funds so that you may not use them to fund other trading.  When you settle your position these funds are released from segregation.   In addition, there is a second type of margin, called variation margin, which must be maintained while holding a short position.  The variation margin is simply the running profit or loss being incurred on the short position.  In you example, if you sold 200 shares at $20 and the price went to $21, then your variation margin would be a debit of $200, while if the price went to $19, the variation margin would be a credit of $200.   The variation margin will be netted with the initial margin to give the total margin requirement ($6000 in this example).  Margin requirements are computed at the close of business on each trading day.  If you are showing a loss of $200 on the variation margin, then you will be required to put up an additional $200 of margin money in order to maintain the $6000 margin requirement - ($6000 - $200 = $5800, so you must add $200 to maintain $6000).  If you are showing a profit of $200, then $200 will be released from segregation - ($6000 + $200 = $6200, so $200 will be release from segregation leaving $6000 as required). When you settle your short position by buying back the shares, the margin monies will be release from segregation and the ledger postings to you cash account will be made according to whether you have made a profit or a loss.  So if you made a loss of $200 on the trade, then your account will be debited for $200 plus any applicable commissions.  If you made a profit of $200 on the trade then your account will be credited with $200 and debited with any applicable commissions." Your broker should make you whole by adjusting the quantity of the underlying (see: http://www.schaeffersresearch.com/education/options-basics/key-option-concepts/dividends-stock-splits-and-other-option-contract-adjustments) but I would check with them that this will happen. You will then have an option on 4 times the underlying for each option. Unless the price has risen in the interim or you bought them after the split was announced you should not make a loss. You will have to rebalance every time your Boolean Buy flag is true. You buy 20% of each fund then next week you have to sell down to 10% of your first 5 funds and buy 10% of the second 5. From Investopedia, A stock split is usually done by companies that have seen their share   price increase to levels that are either too high or are beyond the   price levels of similar companies in their sector. The primary motive   is to make shares seem more affordable to small investors even though   the underlying value of the company has not changed. From Wikipedia, It is often claimed that stock splits, in and of themselves, lead to   higher stock prices; research, however, does not bear this out. What   is true is that stock splits are usually initiated after a large run   up in share price...stock splits do increase the liquidity of a stock;   there are more buyers and sellers for 10 shares at $10 than 1 share at   $100. Some companies have the opposite strategy: by refusing to split   the stock and keeping the price high, they reduce trading volume.   Berkshire Hathaway is a notable example of this. Something more to munch on, Why Warren Buffett Is Against Stock Splits. There is a technique called the Elliott wave which explains these 'shocks'. The reversal directions you are questioning are part of the pattern, it is known as corrections. The Elliott wave is an indicator based on psychology of investors. Think about it this way, if you see a huge up trend what are you most likely to do, sell and make profit or continue, this is why there is a shock before it continues. Many people will sell to be safe, especially after hearing the bad news they won't risk it. By learning the Elliott wave you'll be able to make an educated decision on whether or not to stay or leave. Here are websites on the Elliott wave: http://stockcharts.com/school/doku.php?id=chart_school:market_analysis:elliott_wave_theory http://www.swing-trade-stocks.com/elliott-wave.html The Elliott wave is helpful in any time frame and works well with momentum. Hope this helps. "If I held stock in these companies yesterday, would I have profited by these gains? No.  For DZSI, your 5 shares at $1.10 would now be 1 share at $5.50, so you would have the same total amount.  For SGY, they closed at $6.95, and opened at $32.80, so your five shares at $6.95 would now be one share at $32.80, so you would have actually lost money (not purely because of the split, but because the ""new"" shares are trading lower then the expected 1:5 split price).  A split in general does not affect market cap (how much your total shares are worth) but there may be residual effects that cause the market value to fluctuate after a split that affect the price." Scrip dividends are similar to stock splits. With a stock split, 100 shares can turn into 200 shares; with scrip dividends they might turn into 105 shares. If your primary goal is no / minimized fees, there are 3 general options, as I see it:  Based on the fact that you want some risk, interest-only investments would not be great. Consider - 2% interest equals only $1,500 annually, and since the trust can only distribute income, that may be limited. Based on the fact that you seem to have some hesitation on risk, and also limited personal time able to govern the trust (which is understandable), I would say keep your investment mix simple. By this I mean, creating a specific portfolio may seem desirable, but could also become a headache and, in my opinion, not desirable for a trust executor.  You didn't get into the personal situation, but I assume you have a family / close connection to a young person, and are executor of a trust set up on someone's death. That not be the case for you, but given that you are asking for advice rather than speaking with those involved, I assume it is similar enough for this to be applicable: you don't want to set yourself up to feel emotionally responsible for taking on too much risk, impacting the trustee(s)'s life negatively. Therefore, investing in a few limited index funds seems to match what you're looking for in terms of risk, reward, and time required. One final consideration - if you want to maximize annual distributions to the trustee(s)'s, consider that you may be best served by seeking high-dividend paying stock (although again, probably don't do this on a stock-by-stock basis unless you can commit the time to fully manage it). Returns in the form of stock increases are good, but they will not immediately provide income that the trust can distribute. If you also wish to grow the corpus of the trust, then stock growth is okay, but if you want to maximize immediate distributions, you need to focus on returns through income (dividends & interest), rather than returns through value increase.