The value of a stock is based on long term results. If the investors catch wind of the company sacrificing the long term for the short term, the stock price will go down accordingly.
Stock price is pretty much completely unrelated to the performance of a company because the vast majority of investors have no idea what the fuck is going on in the company.
Look at Tesla. They're doing extremely poorly right now and have been for about a year, and if you look at their stock price you wouldn't think that. They're valued more than, like, every other auto manufacturer combined. Looking at that you'd expect them to hold 50% of the market in all markets they're in. But they don't get anywhere close to that.
The stock market is just gambling. You can't see the other person's hand.
So what is your thesis on GME? Long term play? It is literally a brick and mortar selling physical video games in an era where consoles are increasingly shipping without the ability to play physical media. And yet…
Not really. It’s based on expected future results. Sometimes that’s based in reality, sometimes it’s hopes and dreams. How else do you explain companies that have never made money being having any positive stock price?
There are no “results” just projections.
We probably agree that the stock will eventually reflect value. I think we’d quibble about how long that takes. As the saying goes, the market can remain irrational longer than you can remain solvent. In other words, don’t bet on the market always reflecting reality.
I don’t see that happening in practice, because the competitors are focusing on the short term as well. Another reason is that it is easy to deceive customers about the relative qualities of a product as long as it is cheaper than the competition. So it’s rather the short-termists that are driving a race to the bottom (or at least to
mediocrity).
The most successful companies, in my experience, are not successful because they're so much more awesome than everyone else. They are successful primarily because of luck... the luck of having competitors that suck total ass.
Microsoft, for instance... or in more modern times, Tesla.
I wouldn't put Boeing into that category, though -- it took more than just a lack of good competition to accomplish what they did, back in the day.
Buybacks do not do that any more than dividends do. Buybacks merely allow publicly listed stock owners to precisely time their capital gains tax events.
Surely, there is some amount of income that a business’s owner is allowed to pocket without bad intentions, which may or may not come at the cost of long term investments. Especially in stable/declining businesses.
No, buy packs are pure market manipulation. There is a reason why they were banned prior to 1982. It's a SEC rule that can easily be reversed too but the rich love their ability to manipulate markets for their benefit.
> Buybacks do not do that any more than dividends do.
There's at least a clear relationship if the dividend is reinvested.
If the dividend is spent, though, eg by someone in retirement, then they're different. Under buybacks, the retiree would have to sell some shares to get cash, and would eventually run out. Under dividends, the retiree would be able to continuously pocket money.
stock markets are indices of successful companies; you need to look at the composition. The metric I would look at is the age of the companies in the S&P 500 or similar, and that IS increasingly skewing young, which shows both a focus on the short term and increasing markets
