From: gts (gts@optexinc.com)
Date: Thu Sep 12 2002 - 13:52:22 MDT
Lee Daniel Crocker wrote:
> I agree to the extent that some of the value of a stock represents
> liquidatable assets of the company: physical things and cash it owns,
> contracts, and even some intangible things like "goodwill".
Yes.
> But I was trying to answer the original question that started
> this thread: what value is there in stock /ownership/? The stock's
> value that represents assets can only be realized by selling the
stock.
You answered your own question. The value of stock ownership is that one
can eventually sell the stock for a profit (and possibly earn dividends
in the meantime).
> The same issues would apply to ownership of physical things: say you
> own a large car. ...it makes sense to
> ask the question "why do these people want it in the first place?"
There is a tremendous difference between financial assets and personal
property. Personal property, e.g., cars, have utility whereas financial
assets do not. It is a basic principle of economics that people will pay
for transportation utility in the same way that they pay for food. Such
expenditures are not properly considered investments.
> But that doesn't answer the original question of what started this
mess
> in the first place. Why is the stock potentially valuable at all?
> The only answers to that question are dividends and assets
Right, and future earnings.
-gts
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