4 ms·
The question is not one of doing better, but of inevitability; for a company's stock to be worth anything, it has to pay profits out to the stockholder so goog
by quasimojo 18y ago
The question is not one of doing better, but of inevitability; for a company's stock to be worth anything, it has to pay profits out to the stockholder
so google is worthless? the point of owning a share is to make money from your ownership. if that comes through dividends or through sale value, who cares?
I have no evidence to show dividend-bearing stocks outperform their counterparts, but my point is that those counterparts are overvalued
do you know what fair value is? the price the equity is currently trading at. look at MSFT. a total dog but wheee...look, they cut me a check a few times a year and i take the wife to a movie. and why do dividends imply value? maybe microsoft could have taken the dividend cash and used it to buy out google. excess cash is often seen as a LIABILITY, as it shows the firm cannot use the money to effectively grow. MSFT is a classic example...losing market share even though they have a mountain of cash.
The stock price is, in theory, the net present value of the stream of earnings its bearer will receive. So if no company will ever pay significant monies when it winds down, that leaves dividends
no, stocks get delisted before they go under, and you get bupkus. how are your LEH dividends doing?
- netcan 18y agothe point of owning a share is to make money from your ownership. You need to look at this from a 'whole' perspective. You can make money from buying high selling low, but the market cannot.
- bokonist 18y agoCan you tell me the difference between owning a share of Google and owning a baseball card? A share in Google currently gives you no claim to Google's profits. Nor does it give you any voting rights or control over management. So then what the heck is it good for? Now, baseball cards can be quite valuable. The price can fluctuate enormously, You can make money from investing in them. The price correlates with real world events such as batting average. But fundamentally, the value is based purely on fads, perception, herd behavior, and marketing. At any time, the floor can drop out. The price can plummet and never recover ( baseball cards were my first investing experience and I'm still scarred :-) ) A dividend paying stock has fundamental value. As long as the company's business remains strong, you will earn money from owning the stock, even if everybody else in the world believes it is worthless.
- netcan 18y agoIt's very important not to think about all this to much. Stocks go up. It's all very complicated. You should leave it to the pros who take care of your retirement fund. It's threads like this that cause economic meltdowns.
- MaysonL 18y ago+1 Funny.
- quasimojo 18y agoyou are just moving the argument. are the dollars you get paid in dividends intrinsically valuable? no. people could value dollars to zero at any time. you are just replacing one piece of paper with another.
- pg 18y agoWhat makes Google stock valuable is the prospect of future dividends. And these are not merely theoretical: once a company's growth slows, they have to start paying dividends, or the market will punish their stock price.
- bokonist 18y agoYou would think this would be the case. The trouble is, many tech companies have entered their decline phase, don't pay dividends, and still have relatively high P/E ratios (Yahoo, Dell, Sun, Palm, Alcatel, etc.). That doesn't seem right at all.
- helveticaman 18y agoSo is google worthless? Let's see here. Google pays no dividends, is probably to large to be bought, won't be allowed to merge for antitrust reasons, and if it behaves like other Silicon Valley companies that came and went, will spend every last penny before acknowledging defeat (which granted, is a long way off). Unless Google pays dividends at some point (which Silicon Valley companies usually do not do), then yes, it's stock is worthless. That's exactly what I'm saying. Its stock buys and sells at $441.41 as of my writing this, but is intrinsically worthless.
- pchristensen 18y agoUnless you can find another sucker. By your argument (which I find quite compelling), the only thing that makes stocks valuable is that there is a large market of people willing to buy that stock from you. The stock itself does nothing for you. Thanks for the insight!
- quasimojo 18y agoUnless Google pays dividends at some point (which Silicon Valley companies usually do not do), then yes, it's stock is worthless. as worthless as any other paper currency. indeed google stock has performed well against the US dollar (you could redeem your GOOG into euros). no fiat currency has intrinsic value. come to grips with this. paper currencies have come and gone, stocks are no different than dollars or euros...its just a piece of paper that people will either value high, low, or not at all
- deleted 18y ago[deleted]
- natrius 18y agoPaper currencies are backed by legal tender laws, so the source of their value is apparent. Stocks, not so much.
- deleted 18y ago[deleted]