Re: Superfluous Demand concept

People buy stocks because they think the value of the stocks will increase. It has to do with enthuisam and sentiment, not productivity or value.

Buybacks just increase share prices in the market. Dividends are real money and are, unfortunately, taxed twice.

And some companies keep losing, maybe always will, are arguably useless, and their share prices increase.

ld appreciates. It's called capital gains

only requires one thing, gains in the capital value.

n fact, that is essentially the only reason why stocks gain value.

Sometimes people buy stocks for the dividends. While expectations of capit al gains is also common, there is no reason to say it is based on "enthuisa m[sic] and sentiment". Often the expectation of growth of market value is based on careful consideration of the many factors involved in market prici ng. As others have pointed out it frequently is related to producing goods and profit even if there are no dividends. It is only a few stocks where the value is based on optimism of appreciation without concrete support. T esla is one where there is some traditional support (such as GAAP profits) for expectation of appreciation, but there is a huge factor of enthusiasm s imply because it is a new technology and Tesla is the market leader. The f ormer has risk because profits can change due to market forces (such as rec essions) and the latter has huge risk if the market doesn't turn out or oth ers in the market take the lead down the road.

Every dollar is taxed many, many times as it goes around the economic cycle s.

arterly numbers misses by a penny, the stock drops precipitously. Not beca use the company value has declined in any calculable way, but because the " market" was disappointed.

That is a rare case of course because at some point the cash in a company w ill be gone and the company has to close it's doors. That is often an oppo rtunity for the company's stock price to decrease.

Not in Australia they don't. Many dividends here are franked, meaning that any company tax that has been paid doesn't get paid again. Or more accurately, any part of the dividend on which the full corporate tax has been paid doesn't attract any tax at whatever the recipient's marginal tax rate is. (So some dividends might come only 50%, or 80% franked, for example).

Strangely enough, failure to understand why this is correct and consistent law has resulted in an outcry about franking credits being a "free gift" to retirees etc, for whom dividends are the majority of the income they earn on their life's savings. Their capital isn't "idle" or ill-gotten - it's the culmination of a life of hard work and they should be entitled to its full value, after any tax has been paid (once, not twice). Grifters want double taxation, as long as it doesn't apply to themselves.

Clifford Heath.

ld appreciates. It's called capital gains

only requires one thing, gains in the capital value.

n fact, that is essentially the only reason why stocks gain value.

Some people do. Others have more sense.

Not in Australia they aren't. The company tax paid by the company is divide d up and distributed with the dividends as "imputed tax" and I can use it to to pay off the income tax I owe on those dividends. They are also known as "franking credits" and retired people love them.

arterly numbers misses by a penny, the stock drops precipitously. Not beca use the company value has declined in any calculable way, but because the " market" was disappointed.

Some investors haven't got much sense but there are some companies - Amazon seems to come to mind - who plowed back all their profits for quite a whil e in pursuit of rapid growth, and it can work.