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The premise to this section strikes me as begging the questiom: All stock prices move based on supply and demand not theories and strategies. Well, why do peo
by lr4444lr 4y ago
The premise to this section strikes me as begging the questiom:
All stock prices move based on supply and demand not theories and strategies.
Well, why do people demand a given stock? One word: dividends. This may seem obvious (or not!) But Robert Schiller in a MOOC some years back made this basic truth clear to me: if a company would hypothetically never pay a dividend, no investor would ever want it. Stocks do not need to trade in large volumes to bring people profit and be desirable. They just need to bring dividends, either now or in the future.
- WastingMyTime89 4y agoYou can buy to hold thinking the business will grow. People buy to make money. They don’t care if it comes as dividends or raise in the share price.
- lr4444lr 4y agoRight. But the person they sell to at some point down the trading line has to believe dividends will be forthcoming. Foreclose all possibility of that, and no one would want stock.
- WastingMyTime89 4y agoOr that it will keep growing. Or they want a majority in the company. Stock is ownership.
- ac29 4y agoBut no company can grow faster than the overall economy forever. At some point spending profits on attempted growth is a waste of money that could've been returned to shareholders (see: Zuckerberg, Mark and the billion dollar quest for the virtual legs).
- tjs8rj 4y agoWhy would they never buy it? Art, crypto, NFTs, etc never pay dividends and have markets for them
- smachiz 4y agoThat's only true if they're not in a rapid growth phase. There are other ways to make money from stocks - and stock appreciation is likely a bigger driver to the average investor (and most pro investors).
- Kinrany 4y agoIf a stock was worth 0 because of never paying any dividend, anyone could buy it all, liquidate the company and profit.