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Improbable Lobster posted:cool is there some kind of law or regulation that means that companies have to either do a buyback or dividends of course not, but if you know they never will, why would you buy the stock? why would anyone buy the stock from you, not only for more than you paid, but for any price at all? how is "the stock" even connected to the performance of the company in any meaningful way?
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Apr 26, 2023 06:17
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DELETE CASCADE posted:the only truly binding thing you can do with those voting rights is to gather a majority to take over the board of directors. cool, now y'all own the entire company and can hire different people to manage it if you like, or run it yourselves. but how are you going to get the money out? you're doing this because of the money, right? I’m not disagreeing with you that buybacks and dividends give stock value, I’m just also saying that a portion of control of a company is also valuable. That control would be valuable to other companies that might want to buy the company.
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Apr 26, 2023 06:19
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ADINSX posted:I’m not disagreeing with you that buybacks and dividends give stock value, I’m just also saying that a portion of control of a company is also valuable. you are correct, although the prevalence of dual class stock with inflated voting rights doesn't seem to bother investors that much. voting rights are definitely worth something > 0, but for most stable companies the premium isn't a lot i think voting is especially interesting in our current situation where most stock is owned via mutual funds or etfs, so that vanguard and blackrock etc are major shareholders of everything. but they provide mostly index funds, they can't sell the stock if they don't like management. voting is their only recourse
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Apr 26, 2023 06:26
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DELETE CASCADE posted:of course not, but if you know they never will, why would you buy the stock? why would anyone buy the stock from you, not only for more than you paid, but for any price at all? how is "the stock" even connected to the performance of the company in any meaningful way? ask the people buying obviously worthless stock like bed bath and beyond
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Apr 26, 2023 06:33
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bob dobbs is dead posted:peeps do not do ad hoc dividends in public market land, as a rule, altho they theoretically can. they set up quarterly or whatever dividends and then if they ever change them everyone starts running around with their hair on fire okay, so it’s just for practical reasons regarding the real market, and not fundamental economic reasons is there an argument against raising taxes on buybacks? except “taxes on dividends should be lower instead” of course. it looks like a pretty open and shut loophole to me
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Apr 26, 2023 06:40
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Dividends are really intuitive and it’s obvious why dividend paying stocks have value For stocks that don’t pay a dividend, it’s because instead of surplus profit being paid out to investors, it’s reinvested in the company, so non dividend paying stock is sort of a “let it ride” situation, as owners we all agree to forgo dividend payments to invest in the company so that….? That’s the part I have trouble with, I can’t imagine stock valuation for non dividend paying stock is based entirely on a company eventually buying the stock back. If that were the case, why does the company bother buying the stock back? Are there any stocks out there that promise they’ll never pay dividends? Because that seems worthless to me. even if a stock isn’t paying them now, they might in the future, and that keeps the price up
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Apr 26, 2023 06:40
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I’ve always thought the problems are interesting in finance but I hear the industry is not exactly a world of great work life balance
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Apr 26, 2023 06:43
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non-voting shares with no dividend are literally the same as trading cards and plenty of people obsessively collect and resell those retail investment is made up bullshit to placate little people with the illusion that they are temporarily embarrassed millionaires, and that the system is in some abstract sense egalitarian and democratic institutional investment is a different flavor of made up bullshit that exists on a totally different plane of reality neither has anything to do with intrinsic value
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Apr 26, 2023 06:45
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^ i mean, that all sounds pretty fun to say, but none of it is true
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Apr 26, 2023 06:45
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Improbable Lobster posted:ask the people buying obviously worthless stock like bed bath and beyond we pretend wallstreetbets doesn't exist
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Apr 26, 2023 06:46
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Improbable Lobster posted:ask the people buying obviously worthless stock like bed bath and beyond beyond the previously mentioned insane people, who is buying? the stock is worth 20 cents, having lost 98% of its value over the past year. and it'll lose another 98% this week
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Apr 26, 2023 06:48
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DELETE CASCADE posted:^ i mean, that all sounds pretty fun to say, but none of it is true money is only real because we agree it is
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Apr 26, 2023 06:49
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if you lose this agreement, this is usually because of insane war or material collapse of (local) civilization, so not quite an occasion devoutly to be wished
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Apr 26, 2023 06:51
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DELETE CASCADE posted:^ i mean, that all sounds pretty fun to say, but none of it is true like idk about a lot of stuff but the idea that economics is some kind of science and value is value and objective economic laws exist seems sorta counterrevolutionary to me
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Apr 26, 2023 06:53
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Improbable Lobster posted:money is only real because we agree it is Money is about as old as civilization and predates capitalism. You can acknowledge it exists and still believe it should be distributed more fairly
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Apr 26, 2023 06:58
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money is a social construct, but you aren't getting a stock market without constructing it
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Apr 26, 2023 07:03
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I asked about the value of non-dividend-paying, non-voting shares in D&D a few weeks back. The best answer that I got back was that you still own part of the company, so if the company is ever sold (or partially sold, or taken private) you get a cut of the sale price. That still makes it seem to me like GOOG should be worthless, because if Google is ever sold then it is not going to be anywhere near its current valuation, but maybe you are kind of betting that e.g. Google Cloud will get spun off or whatever? Or maybe it is just basically pokemon cards for your retirement. E: discussion was here: https://forums.somethingawful.com/showthread.php?threadid=3763277&pagenumber=1304&perpage=40&userid=0#post530258008 VikingofRock fucked around with this message at 07:18 on Apr 26, 2023 |
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Apr 26, 2023 07:12
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you're pricing in the eventuality of them selling or paying dividends or doing buybacks later
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Apr 26, 2023 07:13
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ADINSX posted:Money is about as old as civilization and predates capitalism. You can acknowledge it exists and still believe it should be distributed more fairly debt is as old as civilization and predates capitalism, but money is a much more recent invention than civilization
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Apr 26, 2023 07:35
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ADINSX posted:Dividends are really intuitive and it’s obvious why dividend paying stocks have value yeah the let it ride part is because management convinces the equity holders that reinvesting the profits into growth will create more value than just cutting a dividend check. this is what happens to companies that are battling in a new market. this is also why when companies issue dividends they're kinda no longer considered "growth stocks". they're treated like money making machines on cruise control. no new worlds left to conquer, just sit comfortably in your niche and make incremental improvements. Companies like Dow and 3M will still invent new stuff and enter new markets, but that still mostly to defend the core business that 90% of their revenue is coming from.
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Apr 26, 2023 07:51
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it also sometimes hurts businesses if people get used to the dividends. intel has given so high a dividend for so long that it really can't stop doing that or people will think the sky is falling. it's become one of those stocks that's mentioned in all the passive investing income articles. so now they're hosed and can't invest as much back into the business as they'd like because the market demands their five percent
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Apr 26, 2023 08:03
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rotor posted:like idk about a lot of stuff but the idea that economics is some kind of science and value is value and objective economic laws exist seems sorta counterrevolutionary to me its literally not counterrevolutionary. value being entirely subjective is an idea pushed by neoclassical economics to make capitalism look better
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Apr 26, 2023 08:14
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like, its obviously true that base economic reality exists and that speculative bubbles ride on top of it. the speculative bubbles arent the entirety of the situation
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Apr 26, 2023 08:16
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and dont try that "if everyone believed the stock is worth $0 then its worth $0" crap. ideas are real too, just a bit less real than real things. if that makes sense
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Apr 26, 2023 08:17
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Apr 26, 2023 08:18
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DELETE CASCADE posted:of course not, but if you know they never will, why would you buy the stock? why would anyone buy the stock from you, not only for more than you paid, but for any price at all? how is "the stock" even connected to the performance of the company in any meaningful way? apple payed no dividends for years because Steve refused to. But people still bought their stock because it represented a share of a humongous cash pile that just kept getting bigger. "Conventional wisdom" is that a big cash pile is bad and you should use it to do something idiotic like buy a VR headset company and pay john carmack to do whatever it is he does, but Jobs gave no fucks idk if Tim pays dividends or not
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Apr 26, 2023 08:34
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Powerful Two-Hander posted:apple payed no dividends for years because Steve refused to. But people still bought their stock because it represented a share of a humongous cash pile that just kept getting bigger. "Conventional wisdom" is that a big cash pile is bad and you should use it to do something idiotic like buy a VR headset company and pay john carmack to do whatever it is he does, but Jobs gave no fucks do you have a point or… ?
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Apr 26, 2023 08:46
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DELETE CASCADE posted:of course not, but if you know they never will, why would you buy the stock? why would anyone buy the stock from you, not only for more than you paid, but for any price at all? how is "the stock" even connected to the performance of the company in any meaningful way? perhaps... perhaps because nobody involved in the entire system... is a rational actor
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Apr 26, 2023 09:27
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fart simpson posted:do you have a point or… ? if nothing else, that zuck is a loving idiot look, finance and the general social concept of money is <scare quotes> "complicated" </scare quotes> but on simple things such as zuck being an idiot and the deliciousness of Sweet Baby Ray's (Authentic, Award-Winning Barbecue Sauce), i think we can all agree on that invest in Sweet Baby Ray's
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Apr 26, 2023 09:29
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literally every single person who has ever Touched A Stock was in a delusional fugue state, at least during the period they were touching the stock, and you can't prove me wrong bloomberg terminals periodically spray powerful hallucinogens in the face of anyone using them to keep the whole operation going
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Apr 26, 2023 09:31
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my theory explains market behavior better than anyone who has ever won a "nobel" ""prize"" in economics
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Apr 26, 2023 09:33
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Shame Boy posted:my theory explains market behavior better than anyone who has ever won a "nobel" ""prize"" in economics no it doesn’t, he’s right. don’t confuse speculation with the fundamental purpose
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Apr 26, 2023 09:44
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the point of buying stocks is to buy a portion of future profit flows from a company. that’s the only reason stonks exist. that the market then takes on emergent properties and abstractions doesn’t mean that fundamentally changes
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Apr 26, 2023 09:49
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fart simpson posted:do you have a point or… ? that you can buy a stock for a valid reason even if it doesn't pay a dividend. if you bought apple stock for however long it was that's what you were doing and it was financially valid even if you didn't believe that stebe was the lord and saviour
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Apr 26, 2023 10:18
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the opposite end of "no cashflow but high worth" would maybe be tesla: absolutely decoupled valuation from future cash flows or assets so high volatility and insane behaviour
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Apr 26, 2023 10:20
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Powerful Two-Hander posted:that you can buy a stock for a valid reason even if it doesn't pay a dividend. if you bought apple stock for however long it was that's what you were doing and it was financially valid even if you didn't believe that stebe was the lord and saviour you can but that’s not what makes the system work or what fundamentally gives them value
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Apr 26, 2023 10:30
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fart simpson posted:you can but that’s not what makes the system work or what fundamentally gives them value 
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Apr 26, 2023 10:30
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you buy stock to get richer. if you thought it would make you poorer, you would be less likely to do it. I think about this a lot
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Apr 26, 2023 10:33
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idk how robust this analogy is that im coming up with on the spot, but you can collect bottles of wine with the intent to sell them for more than you bought them for, and some people do exactly that. but that's not why the wine industry exists. if you couldnt drink it then that whole wine collectors market wouldnt really exist
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Apr 26, 2023 10:40
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Shame Boy posted:my theory explains market behavior better than anyone who has ever won a "nobel" ""prize"" in economics your ideas inrigue me and i wish to subscribe to your newsletter.
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Apr 26, 2023 10:53
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