Isn't the whole point of owning a company is have a share of its profits? That's why the stock market never made sense to me. The price and price gains or losses on stocks are not related at all to the profits.
You can think of a share as a bet on the future potential value. So past value was previously reflected in the share price, but sometimes high profits mean that the growth is over because there's not useful R&D to be doing, whereas sometimes low profits mean that growth is ahead. Future performance is also highly uncertain and influenced by external factors: geopolitics, demand for the product, other competitors, outside innovation, taxation changes, people's relationship to the CEO, the marginal cost of that investment relative to other similar investments that serve as close substitutes, etc. All of that information is going to be part of the price of the stock, because all of that information influences the future of the company.
Plus then since the future is unknowable, it's tied up with investor's personal risk profiles, discount factors and some straight up sentimentality. If you have a crystal ball and can predict the future perfectly, stock prices would correlate with profits, but even if the market was perfect, current profits would be related to past stock prices, not current stock prices.
(Oh, and to make it more complicated and basically impossible to model with linear equations, if you own stock you can influence those future outcomes both directly via shareholder activism and indirectly via the effect you have on a company's cost of capital, so the whole system is dialectic.)
The point of owning a company is to have a share of its profits. But when you do that, you also sign onto a multitude of risks (like the profit going out the window!)
So the stock market allows you to take those risks and mitigate them in near-as-possible real time.
This is something that confused me for a long time, but I think I've started to understand. A company obviously has some intrinsic value (e.g. through its assets), and that's part of what's reflected in the stock. But change over time is inevitable in a companies assets (and earnings), so the point of the stock market is literally just to bet on that. The end goal is kind of abstract, because most successful companies will never get to the point where they're giving out massive dividends or liquidating their assets, but you can definitely watch a company grow. Even if you gained no dividends from holding 100% of a private company, it still seems better than not holding one (obviously) but it's hard to pin that value down unless we think about it in an abstract way. You can think of the value of a company as the sum of its net assets over time (discounted by inflation, risk, and opportunity cost). So for example, when Apple earns $2.34/share in a quarter, everything that isn't given out in dividends is being reinvested for the future (being turned into assets and earnings growth). Even if the dividends never reach 100% of what you originally paid for the stock, they will rise as Apple continues to grow (in the long term, at least). As the growth continues, the stock becomes more valuable because of the potential for higher dividends. So while the "reason" to own stock is to share their future profits, what you're really betting on is the future profits past your lifetime. The same idea can be applied to bonds, too. Even if you don't hold a bond long enough for it to mature, the underlying value still exists and you are the owner of it. For a 100 year bond, if people think the interest rate will outpace inflation more than before, the value of it goes up, so by holding onto the bond you are still invested in its future "profits", just less directly than waiting for it to mature. One of the really interesting things about financial markets, though, is their ability to craft really abstract assets and assign values to them. Stocks are definitely one of these and they are certainly more complex than they were 100+ years ago.
Plus then since the future is unknowable, it's tied up with investor's personal risk profiles, discount factors and some straight up sentimentality. If you have a crystal ball and can predict the future perfectly, stock prices would correlate with profits, but even if the market was perfect, current profits would be related to past stock prices, not current stock prices.
(Oh, and to make it more complicated and basically impossible to model with linear equations, if you own stock you can influence those future outcomes both directly via shareholder activism and indirectly via the effect you have on a company's cost of capital, so the whole system is dialectic.)