[dpark]

Don't get too wrapped up in that answer. It assumes that investors are rational and able to see the future, when they are neither. Stock value is based on the same thing as everything else: what someone else will pay. Stock prices are no more rational than home prices.

[jcampbell1]

False. There is plenty of dispute about the NPV of all future dividends and the discount rate, but the notion is a fundamental truth. It is follows from basic math and is provable.

[dereg]

You would have done well at Lehman Brothers, really really well.

[joshu]

indeed. pretty much all the points arguing with you are actually just discussing ways to value npv.

[dpark]

Okay, but that's not what he's claiming. He's claiming that NPV is derived exclusively (and rationally, and perhaps clairvoyantly) from the future sum of dividends.

[joshu]

The value of the stock is the current estimation of that npv. How it is estimated is irrelevant. It is the group estimation across all buyers and sellers.

[dpark]

I feel like you're taking part in some unrelated discussion. This entire discussion started because jcampbell claimed that NPV was derived from the sum of future dividends. (Actually, he claimed that stock price was NPV of those future dividends.) No one here seems to be disputing that stock has a NPV. They're disputing jcampbell's claim that NPV is derived exclusively from future dividends.

You're arguing against a claim that no one is making.

[joshu]

i think we have a disconnect.

what do you think an npv of a stock is?

[dpark]

It's provable? Please enlighten me.