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The value of an asset is how much it will pay out. If a company never pays its shareholders deciding instead to burn profits it becomes worthless. Apple has val

The value of an asset is how much it will pay out. If a company never pays its shareholders deciding instead to burn profits it becomes worthless. Apple has value because people believe that at some point in the future apple will decide to give its hundreds of billions of dollars in cash back to investors. Amazon was in a growth phase which is why investors were/are ok with profits being reinvested. Shareholders would not allow that strategy to continue indefinitely. Eventually they've got to see a return.

throw0101a 7y ago
> The value of an asset is how much it will pay out. No, the value of an asset is how much you will get for it. Steve McQueen's 1968 Mustang Fastback from the movie Bullitt has neither dividends nor buybacks, but it was auctioned in January 2020 for US$ 3.4M. * https://en.wikipedia.org/wiki/Bullitt https://en.wikipedia.org/wiki/Bullitt Paul Newman's personal "Paul Newman" Rolex Daytona sold for US$ 17.75M: * https://www.hodinkee.com/articles/paul-newman-rolex-daytona-auction-most-expensive-watch-ever https://www.hodinkee.com/articles/paul-newman-rolex-daytona-... > Eventually they've got to see a return. They can see a return at any point: sell your shares for more than you bought them for. Boom: capital returns. Dividends do not matter: * https://canadiancouchpotato.com/2011/01/18/debunking-dividend-myths-part-1/ https://canadiancouchpotato.com/2011/01/18/debunking-dividen... A dollar in your pocket is a dollar in your pocket regardless of whether it came from dividends or sell your shares: * https://www.moneysense.ca/magazine-archive/the-income-illusion/ https://www.moneysense.ca/magazine-archive/the-income-illusi... You are performing what is called "mental accounting": * https://ritholtz.com/1982/11/explaining-investor-preference-cash-dividends/ https://ritholtz.com/1982/11/explaining-investor-preference-... * https://www.etf.com/sections/index-investor-corner/21413-swedroe-dividends-and-behavioral-econ.html https://www.etf.com/sections/index-investor-corner/21413-swe... * https://en.wikipedia.org/wiki/Mental_accounting https://en.wikipedia.org/wiki/Mental_accounting
- MiroF 7y ago
  Chiming in here after reading this entire thread to say that you are definitely missing the point of the above commentator. "the value of an asset is how much you will get for it." and the price of an asset is an estimate of its value. projection of future dividend/buybacks is an important part of determining that value. the idea that its irrelevant to pricing is ludicrous.

throw0101a 7y ago

> The value of an asset is how much it will pay out. No, the value of an asset is how much you will get for it. Steve McQueen's 1968 Mustang Fastback from the movie Bullitt has neither dividends nor buybacks, but it was auctioned in January 2020 for US$ 3.4M. * https://en.wikipedia.org/wiki/Bullitt https://en.wikipedia.org/wiki/Bullitt Paul Newman's personal "Paul Newman" Rolex Daytona sold for US$ 17.75M: * https://www.hodinkee.com/articles/paul-newman-rolex-daytona-auction-most-expensive-watch-ever https://www.hodinkee.com/articles/paul-newman-rolex-daytona-... > Eventually they've got to see a return. They can see a return at any point: sell your shares for more than you bought them for. Boom: capital returns. Dividends do not matter: * https://canadiancouchpotato.com/2011/01/18/debunking-dividend-myths-part-1/ https://canadiancouchpotato.com/2011/01/18/debunking-dividen... A dollar in your pocket is a dollar in your pocket regardless of whether it came from dividends or sell your shares: * https://www.moneysense.ca/magazine-archive/the-income-illusion/ https://www.moneysense.ca/magazine-archive/the-income-illusi... You are performing what is called "mental accounting": * https://ritholtz.com/1982/11/explaining-investor-preference-cash-dividends/ https://ritholtz.com/1982/11/explaining-investor-preference-... * https://www.etf.com/sections/index-investor-corner/21413-swedroe-dividends-and-behavioral-econ.html https://www.etf.com/sections/index-investor-corner/21413-swe... * https://en.wikipedia.org/wiki/Mental_accounting https://en.wikipedia.org/wiki/Mental_accounting

MiroF 7y ago
Chiming in here after reading this entire thread to say that you are definitely missing the point of the above commentator. "the value of an asset is how much you will get for it." and the price of an asset is an estimate of its value. projection of future dividend/buybacks is an important part of determining that value. the idea that its irrelevant to pricing is ludicrous.