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Stock returns grow because that's where people and institutions put their money. If stock return growth slows (assuming they aren't talking only about dividend
by criddell 2y ago
Stock returns grow because that's where people and institutions put their money.
If stock return growth slows (assuming they aren't talking only about dividends), that means either there's less money in general or it's being parked elsewhere. Which is it?
Or do I misunderstand what stock growth is?
- paxys 2y agoThe two aren't conflicting ideas. Stock returns are directly tied to dividends and buybacks and indirectly tied to profits and overall company performance. If I think a company isn't returning enough, I'll invest my money elsewhere, and its share price will go down. If I think the stock market isn't returning enough, I'll invest my money in bonds or commodities or foreign countries or Bitcoin or cash under my mattress, and the entire market will go down.
- marcosdumay 2y agoThe money doesn't get "parked" in stocks. It's sent to a company, that will use it. Anyway, the idea is approximately right. When there's more money on the economy than stuff to buy, you get inflation, and the extra money gets places to go. Alternatively, yes, the amount of money and the number of time it transacts both change all the time.
- criddell 2y ago> It's sent to a company, that will use it. So if I sell a share of Microsoft and you end up buying it, market makers get some of that and your broker might too, but I would get most of the money.