Stock used to represent ownership of a fraction of the company's assets and the right to that fraction of its profits. The share price converged on the net pres

Stock used to represent ownership of a fraction of the company's assets and the right to that fraction of its profits. The share price converged on the net present value of the expected dividends plus the market value of the assets. Now that most companies refuse to wind down except in severe distress (you'll only get a sliver of the assets' market value) and don't pay dividends, the connection between profits and the investors is severed. The only reason share prices are vaguely correlated to profits is that investors are speculating on each others' faith in a mystical connection between profits and share prices. It's like a baseball card with the name of your favorite sales team on it. The economy would function better if it rewarded buy-and-hold investors for good long-term governance of companies. Instead we tax dividends harder than selling out, make the share price all-important, and reward exponential over-expansion (that's largely where profits go, it's psychologically impressive even if it's less profitable) and market-timing speculators' games.