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by AznHisoka 2840 days ago
“shareholders have a claim on assets in the event of dissolution“

So why does my Apple stock have such a high value? Apple has a low probability of being dissolved, so chances are low I am getting their assets.

2 comments

Actually, in the case of Apple, they announced a sizable share buyback earlier this year, so even if you only plan to hold the stock long enough to sell it for a capital gain you might still be receiving a dividend. AAPL is one of the worst examples of the greater fool theory at work, given that Apple pays a regular dividend, buys back stock, and has a relatively low P/E ratio for a tech company.
You omitted the second part of that

> as well as rights to participate in government of the entity

It's easy to underestimate this -- the price of the stock represents a barrier to acquisition of the company. If the stock falls below a certain point, it would become profitable for an entity or group of entities to gain a controlling interest and reform the company in a way that suits their needs.

That is, not just the promise of future dividends paid to the shareholders, but a barrier against the profits being dispersed in a more aggressive fashion.