Stock market is a huge money hog. Trillions of dollar, millions of analysts, individual traders, investing companies.
What exactly do you own when you are holding the stock? In the old time stocks used to pay dividends. Today most stocks don’t pay dividends. Taxations and excessive regulations killed it. People claim that they buy stock to own “equity” in the company. That’s nice… What is the benefit of owning “equity”? You can vote on shareholder meetings, you can read shareholder reports….Is that it? Where is the cash flow?
If you own large portion of the company you can become a board director. Obviously the directors have some other ways to benefit from “equity” in the company. Some big boys can actually do it. But seriously, how many investors actually want to actively manage a company when they buy a stock?
Majority of “investors” just buy “equity” and hope that they can sell it for higher price. Stock market is essentially a biggest fool game. Big, very well established, pretentious, but nevertheless it’s still a biggest fool game.
Stock dividend used to be the main objective criteria for stocks selection, but not anymore. Main consideration was just money flow from dividends with respect to company stability and solvency.
Stock market analysts use variety of word salads to justify investment decision for stocks: “value of the company”, “growth potential”, “solid fundamentals” to name a few. Sometime they call it “true value” (which is not the same as price). There is no real cashflow from “value” other than finding somebody who is willing to buy it from you for a higher price.
“Greatest fool game” does not mean that you cannot benefit from investing in stocks. It just worth remembering what and why you bought it. Stock price has very little to do with what company actually does, and everything to do with what people with money think about the stock. When you are buying it – you are buying others people future opinions with respect to company solvency.