Trendlover, I am getting really frustrated because I keep telling people that I understand what P is, I understand what E is. But people refuse to acknowledge the fundamental question: HOW DOES THAT TRANSLATE INTO $ for the INVESTOR if it isn't done through D? I understand how that means the company is worth more though bigger E because it's book value just went higher either through more cash on hand, or more warehouses, or whatever else raise book value. What I am saying is, through what mechanism, does that value get translated into my pocket if it isn't through D? People keep saying, well the stock price will go up. And I keep saying, WHY? It has to be in anticipation of a higher D? And yet, how many times do you see any of these tech companies have a D, let ALONE raise D? Why does anyone buy a stock simply because a company is worth more to SOMEONE ELSE? Don't you see? The price goes higher simply because someone buys it. The fact that the company had higher earnings is meaningless in the absence of D to the INVESTOR! So itis a ponzy scheme in the absence of D! Ugh, I need a good example, because I have said this a million times, and I still don't seem to be getting accross that anything that is not a direct payment to me, is a ponzy scheme. What is comes down to is this. People (investors) think that the company = it's stock price. That is so clearly wrong. To teh investor, the company SHOULD = it's dividend stream. The only other mechanism that makes sense is takeover value, but who is buying AMZN or MSFT or scores of other companies with massive earnings, and almost no dividend?
I am not sure I understand your question. It is?, (Why buy the stock with no dividend (guarantee money to me) if only the stock go up because more people buy it? Ok, I ask you, can the stock that is very low price to (book value), and little debt, and managers of the company own alot of the stock(so they care for the company profit), can that stock price go up in future if NO ONE NEW buy the stock? Maybe that is stupid question?
LOL! I am asking why YOU would buy a stock, and then replace YOU by x, where x is anyone. I am trying to lead people to the conclusion that in the absence of dividends, stocks go up mostly in a ponzy scheme, and that the thing that makes that ponzy scheme work more often than not is the 401K phenomena. Ok, say a compnay has zero debt, $1 Quadrillion in the bank, it's stock price is $10 [It has split ten million times] it has $1 Trillion dollars a quarter in earnings, and it pays ZERO dividends. Tell me, what good does it do owning this stock TO YOU as an investor? If your answer is, because OTHER people will realize this is a good company and send the price of the stock higher, YOU DON'T UNDERSTAND WHAT I AM SAYING. THAT IS A PONZY SCHEME.
Nitro, for my post above, I am not saying YOU ask a stupid question, I am saying my question if the stock price can go up with no new buyers, is the stupid question. But I do not know, so I ask you.
Ok, if only a stock go up because new people buy that,(no real money profit from the company make and sell something), I see how it is the ponzi because for all people who sell that stock for profit, it is only because NEW people bought the stock. So the people who sell the stock (profit) take the money from the people who buy the stock (money is not from profit of the company earning, but money is from new stock buyer)
trendlover, no offense, but you are asking if the electronic quote can magically go higher without whatever is posting that price, whether it be a human or computer, has an account at a broker or FCM, and is a willing buyer at that posted price? Well, if there is some other mechanism, after twenty five years of doing this, it would be news to me. The stock does not equal the company. The value of the company may well go higher or lower, and the stock PRICE (which is a reflection of what people and their models believe the company is worth) could be in lah lah land. It is my contention, and to quote a famous document, I hold this truth to be self-evident, that without a D, it is ALL lah lah land.
The IPO price is based on whatever the Investment Bankers think they can gouge the investors for. Why do you think companies go public in euphoric times, and then you almost never see IPOs during crashes? You think these people are stupid? They are friggin slithering snakes in the ground!
So the dividend is guarantee in the ponzi. But some people see (momentum)(new buyers) in the chart. They see this, then sell. So you are saying for people who can not watch the chart (buy and hold) better to buy dividend stock?