Does a stock holder profit from a reverse-stock split?
"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." These are not real gains. Wherever you're looking this up, the prices are not adjusted for corporate actions. In a reverse stock split the price of a single share multiplies by five, but as a shareholder you hold only one share after for every five that you did before. I just had a reverse split done 1 to 35. I went from 110,000 shares and a negative 13k to 3172 shares, and I still had a negative 13k. If your company does a reverse split take the lost and get out, it's bad news all the way around.
Using Fundamental and Technical Analysis together is actually a good idea for longer term trading of up to 6 months or longer.  The whole idea behind trading with Technical Analysis is to increase the probabilities of a trade going in the desired direction by using uncorrelated indicators that produce the same signal to buy or sell at the same time. For example, you might use a Moving Average (MA) as a buy signal when the price falls for a few days, hits the MA and then reverses and starts moving back up. If however, you also include a Stochastic Oscillator (SO) to indicate when the stock is oversold (under 20%), and if the price rebounds from the MA average at the same time as the Stochastic is crossing over in the oversold position, then this may be a higher probability trade. If you also only trade stocks that are Fundamentally healthy (as fundamentally good stocks are more likely to go up than fundamentally bad stocks) then this might increase the probabilities again. Then if you only buy when the market as a whole is moving up, then this will increase your chances again. A few weeks ago at a seminar, the presenter totalled the men in the room to be 76 and the women in the room to be 8. He then asked what will most likely be the next person to walk in the room - a man or a woman? The statistics are on the side of a wan walking in next. This is what we try to do with Technical Analysis, increase our chances when we take a trade. Of course a woman could be the next person to walk in the room, just like any trade can go against you, and this is why we use money management and risk management and take a small loss when a trade does go against you. Lets look at an example where you could incorporate FA with TA to increase your chances of profits:  Above is a candlestick chart of Select Harvest (SHV), the green line above the price is the perceived value, the pink line is the 40 day MA, the blue line is the EPS, and the white lines is the Stochastic Oscillator (above 80% being overbought and below 20% is oversold). From Feb 2015 to start of Aug 2015 the stock was uptrending, since then the price reversed and started to downtrend. The stock was determined to be fundamentally good early in 2015 with the perceived value gradually increasing and greater than the share price, and the EPS starting to increase regularly from mid April. Thus, as the stock is seen as fundamentally healthy any price reversal in the vicinity of the MA could be seen as a buy opportunity. In fact there where 2 such opportunities on 31st March and 11th June where price had reversed and rebounded off the MA whist the SO crossed over in or near the oversold area. The price did reverse and then rebounded off the MA again on 9th July, however the SO was not in or near the oversold area on this occasion, so not as high in probability terms. The price still rebounded and went up again, however another momentum indicator (not shown here) shows some bearish divergence in this case - so another reason to possibly keep away at this point in time. A good signal to get out of the trade, that is your stop loss has not already taken you out, is when the price breaks and closes below the MA line. This occurred on 7th August. So if we had bought on the first signal on 31st March for $7.41 and sold when the priced broke through the MA on 7th August for $11.76, we would have made a profit of approx. 59% in just over 4 months. If bought on the second signal on 11th June for $9.98 and again sold on 7th August for $11.76, we would have made about 18% in under 2 months. So the fundamentals, the Price (in relation to MA) and the SO where all lining up to provide two high probability trades. Of course you would need to incorporate you risk management (including stops) in case the price did not continue upwards after you bought. If the market is also moving up on the day of the signal this will further increase your chances.  Unless you day trade, which I would avoid, a good way to enter your trades after a signal is to enter a stop buy order after market close to buy if the price moves above the high of the signal day. That way if the market and the stock open and move lower during the day after the signal you avoid entering the trade altogether. This can be incorporated as part of your risk management and trading rules. After the price broke down through the MA we can see that a downtrend commenced which is still current today (in fact I just took a short trade on this stock yesterday). We can also see that the perceived value, whilst still above the price, has reached a peak and is currently moving downwards and the EPS after being flat for a few months has just moved down for the first time in 10 months. So maybe the fundamentals are starting to waver a bit on this stock. It may be a good stock to continue shorting into the future. So basically you can continue using Fundamental Analysis to select which stocks to buy, place them in a watch-list, and then use Technical Analysis to determine when these stocks are starting to uptrend and use a combination of uncorrelated indicators to produce higher probability signals for when to enter your trades. "From Wikipedia - Stock: The stock (also capital stock) of a corporation constitutes the equity   stake of its owners. It represents the residual assets of the company   that would be due to stockholders after discharge of all senior claims   such as secured and unsecured debt. Stockholders' equity cannot be   withdrawn from the company in a way that is intended to be detrimental   to the company's creditors Wikipedia - Dividend: A dividend is a payment made by a corporation to its shareholders,   usually as a distribution of profits. When a corporation earns a   profit or surplus, it can re-invest it in the business (called   retained earnings), and pay a fraction of this reinvestment as a   dividend to shareholders. Distribution to shareholders can be in cash   (usually a deposit into a bank account) or, if the corporation has a   dividend reinvestment plan, the amount can be paid by the issue of   further shares or share repurchase. Wikipedia - Bond: In finance, a bond is an instrument of indebtedness of the bond issuer   to the holders. It is a debt security, under which the issuer owes the   holders a debt and, depending on the terms of the bond, is obliged to   pay them interest (the coupon) and/or to repay the principal at a   later date, termed the maturity date. Interest is usually payable   at fixed intervals (semiannual, annual, sometimes monthly). Very often   the bond is negotiable, i.e. the ownership of the instrument can be   transferred in the secondary market. This means that once the transfer   agents at the bank medallion stamp the bond, it is highly liquid on   the second market. Thus, stock is about ownership in the company, dividends are the payments those owners receive, which may be additional shares or cash usually, and bonds are about lending money. Stocks are usually bought through brokers on various stock exchanges generally. An exception can be made under ""Employee Stock Purchase Plans"" and other special cases where an employee may be given stock or options that allow the purchase of shares in the company through various plans. This would apply for Canada and the US where I have experience just as a parting note. This is without getting into Convertible Bond that also exists: In finance, a convertible bond or convertible note or convertible debt   (or a convertible debenture if it has a maturity of greater than 10   years) is a type of bond that the holder can convert into a specified   number of shares of common stock in the issuing company or cash of   equal value. It is a hybrid security with debt- and equity-like   features.  It originated in the mid-19th century, and was used by   early speculators such as Jacob Little and Daniel Drew to counter   market cornering. Convertible bonds are most often issued by   companies with a low credit rating and high growth potential." The stock market is no different in this respect to anything that's bought or sold. The price of a stock like many other things reflects what the seller is prepared to sell it at and what the buyer is prepared to offer for it. If those things match then a transaction can take place. The seller loses money but gains stocks they feel represent equivalent value, the reverse happens for the buyer. Take buying a house for example, did the buyer lose money when they bought a house, sure they did but they gained a house. The seller gained money but lost a house. New money is created in the sense that companies can and do make profits, those profits, together with the expected profits from future years increase the value that is put on the company. If we take something simple like a mining company then its value represents a lot of things: and numerous other lesser things too. The value of shares in the mining company will reflect all of these things. It likely rises and falls in line with the price of the raw materials it mines and those change based on the overall supply and demand for those raw materials. Stocks do have an inherent value, they are ownership of a part of a company. You own part of the asset value, profits and losses made by that company. Betting on things is different in that you've no ownership of the thing you bet on, you're only dependent on the outcome of the bet. Well, arbitrage is a simple mean reversion strategy which states that any two similar commodity with some price difference (usually not much)  will converge. So either you can bet on difference in prices in different exchanges or also you can bet on difference in futures value.  For example if current price of stock is 14$ and if futures price is 10$.  Then you can buy one futures contract and short one stock at the market price. This would lock in a profit of 4$ per share. If the portfolio itself is taxable, then yes; if you have two stocks and you're rebalancing them, without using new cash, you are forced to sell one stock to buy another. That sale is taxable, unless you're in some sort of tax deferred/deductible account, such as an IRA.   If you're talking about you being in a mutual fund and the fund itself rebalances, the same rules apply as above, though indirectly; you'll have capital gains realized and distributed to you, those gains will be taxed unless, again, your account is a retirement account. If you have a public company and shareholder A owns 25% and shareholder B owns 25%, and lets say the remaining 50% is owned by various funds/small investors.   Say profits are 100mil, and a dividend is payed. Say 50 mil worth is payed out as dividend and 30 mil is kept as retained earnings for future investment. Can the remaining 20 mil be distributed to shareholders A and B, so that they both get 10mil each? Can certain shareholders be favored and get a bigger cut of profits than the dividends pay out is my question basically. Exact rules may be different depending on the size of the investor, the specific broker, and the country.  For both the US and Canada, short sales occur only through one's margin account.  And shares that are borrowed for shorting only come from a margin account. Shares held in a cash account are not available for shorting.  From Wikipedia Short (finance) - The speculator instructs the broker to sell the shares and the   proceeds are credited to his broker's account at the firm upon which   the firm can earn interest. Generally, the short seller does not earn   interest on the short proceeds and cannot use or encumber the proceeds   for another transaction. As with many questions, I'd suggest you contact your broker for the exact details governing your account. Yes, because most were holding it from 50-300 dollars cost pre-split, giving them a very healthy dividend yield today.  The question is upside if you buy today, not upside from 5 years ago.  I bought it at 300 too, but today other stocks are making me money...