I’ve sometimes questioned what the market numbers really mean to a company. If they want to sell more stock they can sell it at a higher price if the market has soared... but ideally shouldn’t that be tied to the company’s own prospects. And then what does one do with the stock. If it doesn’t have substantial dividends, what we are looking at is a gambling game, not a profit sharing game. And gambling games have fads. I’d suggest looking at markets of highly dividend bearing stocks, for a view of something more realistic.
When you go to your broker and buy stock, you are not “giving money to the company”. You are buying “used” stock, in the same way that if you buy a used Chevy, GM makes nothing on it. The only way a company acquires money spent buying stock is at the moment a stock goes IPO or if there a secondary offering and the co sells “newly issued” stock. That original money used to buy stock goes to the company selling their paper. Otherwise, if you just buy shares of ATT or AAPL, you are buying “used” shares that might have been sold a zillion times or one time. (By the way, that’s why, when some organization wants to divest of its Caterpillar stock because this one type of people bulldoze the slums of other people and supposedly expropriate their land it has essentially zero effect upon the company and so the exercise of selling the stock is goofball.)
Now, you could certainly say that 99.999% of companies retain some (in some cases lots of) stock on their books and the continued (or not) interest of the retail and institutional public in retaining that stock and not selling it all en masse helps keep the price of that stock up and thus, since all [common] shares are considered to be valued equally, that helps elevate or at least maintain the value of the company’s so-called “treasury” stock. Fair enough.
I appreciate what you are saying as to dividends, eg “why own stock if it pays no divs?” and that is one among several approaches to stock investing. It is also the case that the market can assign a value to a stock, div payer or not, that advances mightily, far beyond what yer typical div paying stock does. Dominoes Pizza was a $5 stock ten years ago and is $185 today. And of course MSFT et al, the DPZ example shows that a stock need not be a whizbang tech leader or a cancer cure formulary to experience huge gains over time.
Good div paying stocks are probably the most conservative and as you say “more realistic” but there is nothing as realistic as the number in the lower right of your brokerage statement. Philip Morris PM has made a very nice swing of late from 95 to 108; while VZ and T are kind of waddling around doing nothing in particular. (These are fat div payers) We are in a market phase where people think rates are rising, thus the big div payers (which act like bonds in some ways) are a bit shunned and people are more interested in flyers. This too shall pass.
The market, in my opinion, is (after this huge post election ramp) kind of waiting around to see what tax relief might be granted to corporations; inclusive of repatriation relief. Smart or dumb, any given company that gets a tax break from 35% to 15% is probably going to be worth maybe 15% more, and maybe overnight, so that is a thing IMO many people are kind of waiting around for. And it’s well worth waiting around for (by “waiting around” I mean hanging in with their long stock and not selling [even] at these elevated levels because that 15% ramp is 3-4+ years of dividends even if you are a dividend hog.
No_body_knows_how_markets_behave_at_all_time_highs. Just think about that.