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The whole point of owning stock is being able to vote on who runs the company.

by all_blue_chucks 8y ago

travisjungroth 8y ago
That's not the _whole_ point. You also can have financial benefits.
- khalilravanna 8y ago
  I'd argue that's the main benefit. At least that's what I gleaned from the Financial Markets course taught my Robert Shiller. You own stock so you can get paid dividends. That's what provides its inherent value which underpins a lot of how the stock market works (at least at a theoretical level).
  - the_watcher 8y ago
    Roughly 40% of global stocks don't even pay dividends [0], so that's pretty clearly not the only reason to own stocks. [0] https://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/02/04/7-myths-about-dividend-paying-stocks https://money.usnews.com/money/blogs/the-smarter-mutual-fund... (from 2014, but the number likely hasn't changed substantially)
    - iaabtpbtpnn 8y ago
      In theory, the price of a stock reflects the market's expectation of future dividends. In practice, the market expects lots of things that aren't true.
      - Gibbon1 8y ago
        I've come around to the idea that stocks have an intrinsic value as collateral/store of value. I saw that with a family that owned a condemned property. They couldn't rent it but they sure could borrow against the land price (ever rising) minus the cost of demo'ing the old building. I also think stocks tend to keep up with/beat inflation and thus are better than cash as a store of value.
        dredmorbius 8y ago
        Bingo. So long as asset value inflates, it's good for cash via loans. The moreso if asset inflation > nominal interest rates.
      - umanwizard 8y ago
        The expectation doesn't have to be a certainty for this to make sense. If there is an 0.01% chance of paying $10,000 dividend, or 100% chance of paying $1 dividend, the expected payout is the same.
    - nopzor 8y ago
      A stock only has value (theoretically) because it offers cash flow to owners. that cash flow is created by eg distributions (dividends) or as a result of an acquisition. If a stock will never create cash flow for the owner it theoretically has no value.
  - smsm42 8y ago
    I don't have any data handy, but intuitively I would argue the majority of people owning stock never do anything to control the management of the company, neither they want to. They want the part of the revenue stream that is produced either by dividends or by stock appreciation, that's it. Of course, there are activist investors, but saying all of them are such sounds wrong.
  - TeMPOraL 8y ago
    Almost. From what I've observed, the main reason to own stock is to flip it to the next sucker for more than you bought it for. I don't often see people caring about dividends directly. I guess that's a job for index funds?
jetrink 8y ago
Not this stock. It's split into two classes, one of which grants vastly more voting power than the other. Zuckerberg still personally controls a majority of the votes.
- all_blue_chucks 8y ago
  "Stock" is just a way to split up ownership of a company, letting the owners vote on management. Without this feature something isn't really a stock, at least not in spirit. It's more like the shittiest of trash-tier junk bonds.
  - iaabtpbtpnn 8y ago
    And yet people keep buying FB stock, and IPOs with this same dual-class scheme (and no intent to ever pay dividends) still get hyped up. It's because the people buying them aren't long-term value investors, they're gamblers. They just hope to find another sucker to buy the stock at a higher price than they paid.
  - jedberg 8y ago
    Maybe true, but they knew it going in. It’s not like it was a secret that he has the majority of the votes.
  - opportune 8y ago
    Yeah but it doesn't expire and the underlying asset can increase in value. And the interest rate can fluctuate. Not really comparable to a junk bond
  - soVeryTired 8y ago
    A bond has a fixed return if held to maturity. Equity has unlimited upside and has no maturity. Stock is the residual claim on a company's assets after all other claims are settled. Equity isn't a junk bond, with or without voting rights.
    - Thrymr 8y ago

The whole point of owning stock is being able to vote on who runs the company.

travisjungroth 8y ago

That's not the _whole_ point. You also can have financial benefits.

khalilravanna 8y ago
I'd argue that's the main benefit. At least that's what I gleaned from the Financial Markets course taught my Robert Shiller. You own stock so you can get paid dividends. That's what provides its inherent value which underpins a lot of how the stock market works (at least at a theoretical level).
- the_watcher 8y ago
  Roughly 40% of global stocks don't even pay dividends [0], so that's pretty clearly not the only reason to own stocks. [0] https://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2014/02/04/7-myths-about-dividend-paying-stocks https://money.usnews.com/money/blogs/the-smarter-mutual-fund... (from 2014, but the number likely hasn't changed substantially)
  - iaabtpbtpnn 8y ago
    In theory, the price of a stock reflects the market's expectation of future dividends. In practice, the market expects lots of things that aren't true.
    - Gibbon1 8y ago
      I've come around to the idea that stocks have an intrinsic value as collateral/store of value. I saw that with a family that owned a condemned property. They couldn't rent it but they sure could borrow against the land price (ever rising) minus the cost of demo'ing the old building. I also think stocks tend to keep up with/beat inflation and thus are better than cash as a store of value.
      - dredmorbius 8y ago
        Bingo. So long as asset value inflates, it's good for cash via loans. The moreso if asset inflation > nominal interest rates.
    - umanwizard 8y ago
      The expectation doesn't have to be a certainty for this to make sense. If there is an 0.01% chance of paying $10,000 dividend, or 100% chance of paying $1 dividend, the expected payout is the same.
  - nopzor 8y ago
    A stock only has value (theoretically) because it offers cash flow to owners. that cash flow is created by eg distributions (dividends) or as a result of an acquisition. If a stock will never create cash flow for the owner it theoretically has no value.
- smsm42 8y ago
  I don't have any data handy, but intuitively I would argue the majority of people owning stock never do anything to control the management of the company, neither they want to. They want the part of the revenue stream that is produced either by dividends or by stock appreciation, that's it. Of course, there are activist investors, but saying all of them are such sounds wrong.
- TeMPOraL 8y ago
  Almost. From what I've observed, the main reason to own stock is to flip it to the next sucker for more than you bought it for. I don't often see people caring about dividends directly. I guess that's a job for index funds?

jetrink 8y ago

Not this stock. It's split into two classes, one of which grants vastly more voting power than the other. Zuckerberg still personally controls a majority of the votes.

all_blue_chucks 8y ago
"Stock" is just a way to split up ownership of a company, letting the owners vote on management. Without this feature something isn't really a stock, at least not in spirit. It's more like the shittiest of trash-tier junk bonds.
- iaabtpbtpnn 8y ago
  And yet people keep buying FB stock, and IPOs with this same dual-class scheme (and no intent to ever pay dividends) still get hyped up. It's because the people buying them aren't long-term value investors, they're gamblers. They just hope to find another sucker to buy the stock at a higher price than they paid.
- jedberg 8y ago
  Maybe true, but they knew it going in. It’s not like it was a secret that he has the majority of the votes.
- opportune 8y ago
  Yeah but it doesn't expire and the underlying asset can increase in value. And the interest rate can fluctuate. Not really comparable to a junk bond
- soVeryTired 8y ago
  A bond has a fixed return if held to maturity. Equity has unlimited upside and has no maturity. Stock is the residual claim on a company's assets after all other claims are settled. Equity isn't a junk bond, with or without voting rights.
  - Thrymr 8y ago