3 ms·

Think about it this way: Why put money in a stock that's not going anywhere when there are so many other options

Mizza 4y ago
Shocking that this needs to be pointed out, but because the company is supposed to _actually do something_. Ideally, that thing is good, and there are benefits to being able to exert some influence on how decisions about that thing are made.
NegativeK 4y ago
That's very different than a legal obligation.
mindcrime 4y ago
Why put money in a stock that's not going anywhere The most obvious one would be "because you believe in the company's mission and want to support that mission." It's just a variation on the reason why people donate to charities, sign up for Kickstarters, buy products from a certain company just to help that company, etc, etc. Not everybody is a profit-maximizing machine in terms of how they live their lives.
hannasanarion 4y ago
When you buy a stock on the open market, the company doesn't get any of the money, it goes to whoever was the last person to own that stock. There is no built-in incentive for a company to seek to increase it's stock price except that current owners want to be able to sell higher than they bought. Once a company has gone public for the first time, it can't get any more fundraising from shareholders without issuing more fresh stock which would make existing shareholders very angry because it dilutes the value of those existing shares. Setting corporate policy with the goal of increasing the stock price doesn't encourage new investment, and it doesn't help the company at all, it just makes existing shareholders happy. But since the governing structure of basically every company says that shareholders are the exclusive decision makers, that's what happens, regardless of whether it's good for the company, customers, employees, or the market.
- astrange 4y ago
  > When you buy a stock on the open market, the company doesn't get any of the money, it goes to whoever was the last person to own that stock. The company was partially able to get that money in the IPO because the IPO buyers expected you'd buy it from them. > Once a company has gone public for the first time, it can't get any more fundraising from shareholders without issuing more fresh stock which would make existing shareholders very angry because it dilutes the value of those existing shares. Doesn't seem true in practice since FAANGs issue shares to pay employees' RSUs all the time, and meme stocks like Hertz and AMC have done at the market raises that make their investors even happier.

Shocking that this needs to be pointed out, but because the company is supposed to _actually do something_. Ideally, that thing is good, and there are benefits to being able to exert some influence on how decisions about that thing are made.

NegativeK 4y ago

That's very different than a legal obligation.

mindcrime 4y ago

Why put money in a stock that's not going anywhere The most obvious one would be "because you believe in the company's mission and want to support that mission." It's just a variation on the reason why people donate to charities, sign up for Kickstarters, buy products from a certain company just to help that company, etc, etc. Not everybody is a profit-maximizing machine in terms of how they live their lives.

hannasanarion 4y ago

When you buy a stock on the open market, the company doesn't get any of the money, it goes to whoever was the last person to own that stock. There is no built-in incentive for a company to seek to increase it's stock price except that current owners want to be able to sell higher than they bought. Once a company has gone public for the first time, it can't get any more fundraising from shareholders without issuing more fresh stock which would make existing shareholders very angry because it dilutes the value of those existing shares. Setting corporate policy with the goal of increasing the stock price doesn't encourage new investment, and it doesn't help the company at all, it just makes existing shareholders happy. But since the governing structure of basically every company says that shareholders are the exclusive decision makers, that's what happens, regardless of whether it's good for the company, customers, employees, or the market.

astrange 4y ago
> When you buy a stock on the open market, the company doesn't get any of the money, it goes to whoever was the last person to own that stock. The company was partially able to get that money in the IPO because the IPO buyers expected you'd buy it from them. > Once a company has gone public for the first time, it can't get any more fundraising from shareholders without issuing more fresh stock which would make existing shareholders very angry because it dilutes the value of those existing shares. Doesn't seem true in practice since FAANGs issue shares to pay employees' RSUs all the time, and meme stocks like Hertz and AMC have done at the market raises that make their investors even happier.