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It seems to me that for companies that pay no dividends (and assuming you would have not nearly enough stock to have a vote that matters) there is no value at a

by esrauch 15y ago

It seems to me that for companies that pay no dividends (and assuming you would have not nearly enough stock to have a vote that matters) there is no value at all in the stock outside of the stock price. The only relevant metric is what other people are willing to pay to buy your stock. Through some mechanism that I can't undertand, the perception of the stock value is still tied to the performance of the company, so it seems like even people going long are still dealing with their predictions of other peoples valuations.

Retric 15y ago
IMO, the fundamentals are the only really important factor in a long term stock purchasing because the rest is mostly just paperwork. Companies can start to pay dividends even if they have avoided them for a vary long period of time. EX: Microsoft Companies can also be bought out and have their total stock price + a small premium paid out to their investors. And finally rather than pay a dividend a stock buy back program can accomplish the same net result with significant tax advantages.
lotharbot 15y ago
> for companies that pay no dividends ... there is no value at all in the stock outside of the stock price [but] the perception of the stock value is still tied to the performance of the company Owning a stock is like owning a fraction of a company. The value of stock comes from the following: (1) dividends (that is, a fraction of current profits) (2) assets (that is, a fraction of stuff the company has that could be sold; one of Warren Buffett's strategies is to buy companies that have more assets than their total stock price, such that merely liquidating the company would turn a profit.) (3) estimated future dividends (a company may not presently be paying dividends, but may be on a clear trajectory to profitability and therefore future dividends) (4) estimated future assets ("growth" type stocks are in companies that are investing profits in assets rather than paying out dividends. This has certain tax advantages over dividend-paying stocks.) (5) estimated future valuations (that is, guesses as to what others might pay for the stock later) Notice that only one of these involves perceptions of others' valuations. The rest are a matter of company performance.
- _delirium 15y ago
  For assets (or future assets), you need to discount them by a probability that the investor could ever actually see that money, either via dividends, or via a 'liquidity event' of one sort or another, since an asset isn't really your asset if you can never touch it. Warren Buffet sees to that by buying controlling stakes in companies, so not only do the companies have assets that could theoretically be liquidated for a profit, but he could actually liquidate the company if he wanted to (or at least, could force it to start selling off assets and returning their value as dividends).

by esrauch 15y ago

Retric 15y ago

IMO, the fundamentals are the only really important factor in a long term stock purchasing because the rest is mostly just paperwork. Companies can start to pay dividends even if they have avoided them for a vary long period of time. EX: Microsoft Companies can also be bought out and have their total stock price + a small premium paid out to their investors. And finally rather than pay a dividend a stock buy back program can accomplish the same net result with significant tax advantages.

lotharbot 15y ago

> for companies that pay no dividends ... there is no value at all in the stock outside of the stock price [but] the perception of the stock value is still tied to the performance of the company Owning a stock is like owning a fraction of a company. The value of stock comes from the following: (1) dividends (that is, a fraction of current profits) (2) assets (that is, a fraction of stuff the company has that could be sold; one of Warren Buffett's strategies is to buy companies that have more assets than their total stock price, such that merely liquidating the company would turn a profit.) (3) estimated future dividends (a company may not presently be paying dividends, but may be on a clear trajectory to profitability and therefore future dividends) (4) estimated future assets ("growth" type stocks are in companies that are investing profits in assets rather than paying out dividends. This has certain tax advantages over dividend-paying stocks.) (5) estimated future valuations (that is, guesses as to what others might pay for the stock later) Notice that only one of these involves perceptions of others' valuations. The rest are a matter of company performance.

_delirium 15y ago
For assets (or future assets), you need to discount them by a probability that the investor could ever actually see that money, either via dividends, or via a 'liquidity event' of one sort or another, since an asset isn't really your asset if you can never touch it. Warren Buffet sees to that by buying controlling stakes in companies, so not only do the companies have assets that could theoretically be liquidated for a profit, but he could actually liquidate the company if he wanted to (or at least, could force it to start selling off assets and returning their value as dividends).