[bruce343434]

> not concerned about the actual economy.

Why would it be? Non dividend stocks only have value because other people think they have value (i.e. greater fool theory).

Only dividend stocks have some base value connected to how well the company does. (Higher dividend if it does well, lower if it does poorly.) But they still also have a lot of "greater fool" value.

Beyond dividend, stocks have no intrinsic value. Nowadays you don't even get a piece of paper to wipe your ass with anymore, it's all digital.

[JumpCrisscross]

> Non dividend stocks only have value because other people think they have value (i.e. greater fool theory)

Alphabet buys back shares equal to the GDP of Uganda every year. There are more ways to return capital than through dividends.

[bruce343434]

what happens when ALL the stocks have been bought back? what is the natural conclusion? you get extra points if you mention dilution i.e. oops we turned on the ~~money~~ stock printer and your stock is now actually worth less!

[JumpCrisscross]

> what happens when ALL the stocks have been bought back?

This can't happen in practice. It would require the company's value to fall below the buyback amount, which is itself a fraction of the company's cash and thus value. (Like, yes, I could engineer a weird failing company where this could happen. But that would just be describing a peculiarity of how the company failed. If the company is doing fine, this doesn't occur.)

If you have trouble with a public-market buyback, consider how tenders are done in private markets. You're a shareholder who has the option of selling back your shares. It's a direct way for you to tap the company's treasury as a shareholder. The company's shareholders could vote to distribute all the cash and assets in a buyback. But we have a word for that: liquidation.

[torlok]

Every time I try to explain this to people I feel like I'm talking to a brick wall. Even more frustrating to hear, otherwise reasonable, market analysts say that "dividends don't matter because the stock value goes down on payout". What doesn't matter is how successful a company is if they don't share their profits. You're literally buying a Pokémon card just with a lot of liquidity until the illusion of value bursts, hoping that somebody will buy you out because P/E improves or whatever.

[jjav]

> Only dividend stocks have some base value connected to how well the company does.

That's not how it works. If the company has profits they can distribute it in many ways. Dividends is one, but not a great one because it forces you to pay taxes on it this year. Or they can buy back shares which increases the share price, which is better because then you don't have taxable income on that until you decide to sell. Or they can reinvest that money into the business to grow it, which is the ideal option, although not always possible.

[andric]

They do have intrinsic value!

Growth stocks trade on a multiple of earnings: earnings have intrinsic value.

[torlok]

To who? There's no immediate benefit of holding a stock that doesn't pay out beyond voting rights, or a fraction of company assets. As parent said, you're just hoping to sell it to somebody down the line for more. It's speculation. The market is liquid, and a lot of people believe these stocks have value, but it's still speculation.

[bruce343434]

That's just dividend stocks with more shady. We promise to invest the dividend you would have gotten into ourselves to become more valuable bro. But that will only be reflected in "valuations" that don't directly affect your bank account. It is still the greater fool theory.

The worst is growth stocks that are a wrapper around actual dividend stocks. Beyond number going up, what actual concrete utility are you getting? Beyond waiting for the line to go up to eventually sell it to a greater fool, what can you _actually_ do with it? It's not real.

It is only real because enough people believe it is real. And they believe it because they want to believe it, because they are greedy and want easy money.

Once the market tanks and the greed turns into fear, there will be bagholders and the brokers will be laughing. The people who skim fees and percentages will be cozy.

"Now is the time to invest" they will say, because from here the line can only go up! And it will, eventually, because people want to believe, because they are greedy.

The only thing the stock market makes money on is greed. That is the thing that drives stock value. Not the economy.

[dgoldstein0]

This take makes sense but isn't really accurate. A lot of companies have stock buy back programs in lieu of dividends; essentially, using their cash flow to manipulate their stock price instead of returning money to every investor. Now this doesn't guarantee a particular price usually, but does help push the price up when they are buying a significant amount from the market.