Home › Guides › Beginner questions
Why did a split not leave me up?
Right after a clean split, the pile is worth what it was worth before. More shares at a lower price can be the same dollars. A fall after that is a fall in the shares, not a failure of the split math.
The short answer
Right after a clean split, the pile is worth what it was worth before. More shares at a lower price can be the same dollars. A fall after that is a fall in the shares, not a failure of the split math.
The position
Here is one position (hypothetical, made-up prices). The count is 200 shares. The first figure in the story is $40. The later figure is $30.
| What you are looking at | Count | Price | Value | Versus the first total |
|---|---|---|---|---|
| The first total | 200 shares | $40 | $8,000 | $0 |
| After the price fell | 200 shares | $30 | $6,000 | −$2,000 |
The bottom row is this account. The −$2,000 is the gap. The price fell. Holding does not put the first figure back. These figures are made-up, so the subtraction stays checkable after the market moves.
Start with the count. 200 shares at $40 comes to $8,000. The later price is $30. The same count at that price comes to $6,000. Subtract. $8,000 minus $6,000 is $2,000. That is the whole table. It is not a fee hiding in the price, and it is not a forecast of tomorrow.
How to check it on the statement
Read the count first. Then read the price the statement used. Multiply those two yourself. If your product is not a share, multiply the point move by the contract size instead of multiplying a share price. The number you get should match the value in the table, or you are looking at a different count.
Write the first total on one line and the later total under it. The gap is a subtraction. Do not add a second story, such as a fee or a dividend, until you see that line on the statement. A missing line is a zero, not a guess.
If you sold part of the position, split the page into the cash that left and the count that stayed. Add those two. A sale of one piece does not freeze the price of the piece you kept.
If the order never filled, the statement still shows the old count. Look in the order history for a cancel, an expiry, or a limit the market never traded. The position page will not show an order that died.
Do this before you decide what the market "meant." The dollars are the count times the price you can point at. The reason can wait until those two numbers are written down.
What happened
You held 100 shares at $80, which is $8,000. A two-for-one split makes that 200 shares at $40. Two hundred times $40 is still $8,000. The split did not pay you and it did not take from you. Then the price fell to $30. The 200 shares are worth $6,000. The whole $2,000 gap happened after the split was even. Counting 200 shares at the old $80 price is the mistake. The old price applied to 100 shares, and it is gone.
How to read a brokerage statement shows the count you still have and the price the statement used. It does not replay the order you meant to send. If the statement's count disagrees with this page, use the statement and do the subtraction again.
What this is not
A stock dividend that hands you extra shares is a different morning, and a stock dividend is not free shares prices one of those. This page is a split that was even, and then the market price fell. Do not mix the even moment with the later price and call the split the loss.
The account does not undo it
A TFSA or an RRSP changes the tax treatment of what is inside. It does not put the first price back. The shelter does not pay the gap back, and a lower price does not hand contribution room back. Room follows the contribution rules, not the chart. A taxable account shows the same mark. The wrapper decides tax. The count and the price decide the dollars.
If the custodian does not allow this product, the custodian's list wins over a general description. The math above is only for a position the account actually holds.
What to write down
- The count and price before the split.
- The count and price the moment it is even.
- The later price on the new count.
- That the loss starts after the even moment, not inside the split.
Then subtract. If a step is missing, the gap on the screen is not explained yet. Do not fill the blank with a rate, a fee, or a yield you did not read off a statement or a contract spec.
Questions
Did the split take $2,000? No. At $40 the 200 shares were still $8,000. The price fell to $30 after that.
Should I multiply 200 by $80? No. Eighty dollars was the pre-split price, on 100 shares. The new price started at $40.
Is a split a dividend? Not this one. The dollars were unchanged at the even moment. A dividend page is a different event.
Does a TFSA get extra value from the extra shares? No. More shares at half the price are the same dollars. The later fall is still a fall.
Are these the live prices? No. They are hypothetical, so the −$2,000 stays checkable.
Follow along