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"Once the dollar inflow stops, it's over." That's true of anything. If nobody is buying X, you can't sell X. If nobody is buying stocks, stocks are worthless.
by tofukid 5y ago
"Once the dollar inflow stops, it's over."
That's true of anything. If nobody is buying X, you can't sell X. If nobody is buying stocks, stocks are worthless.
- huijzer 5y ago> That's true of anything. If nobody is buying X, you can't sell X. If nobody is buying stocks, stocks are worthless. Most assets do produce income, that's usually why you would invest in them. For example, stocks provide dividends and houses provide rent. This is also one of the reasons why Warren Buffet advises against buying gold and cryptocurrencies, they do not produce anything. The sentiment that stocks are worthless if no one is buying them is typical for speculators who do not care about the intrinsic value of a stock.
- tofukid 5y agoWithout new money coming in, stock returns don’t beat inflation. Average dividend return on S&P500 is only 2%. Most people invested in stocks are dependent on stock prices going up to beat inflation. https://ycharts.com/indicators/sp_500_return_from_dividends_annual https://ycharts.com/indicators/sp_500_return_from_dividends_...
- twiceaday 5y agoDividends are bad for tax drag, its very common now to re-invest that money back into the company, raising the stock price. Ultimately all stock prices rise because more money flows in, but the reasons for the flow matters. If a company wins $1B out of thin air its still up to the investors to realize this and price the stock accordingly. Which is completely different from money flowing in because a cult-of-personality ceo tweeted a meme.
- fileeditview 5y agoWhy would stocks be worthless then? You still collect dividends. You own a part of a company.. Which again makes it illogical that no one would be buying them.