Let me append the saying a bit: The US government can remain irrational longer than you can stay solvent.
There's basically two stock markets: things valued on fundamentals and things valued on vibes.
And I don't think there's ever going to be a unified theory of value that can span both, because the former is quantitative and the latter is psychology.
Stocks can start paying dividends in the future: MSFT did not in the past, and does now. AAPL did, stopped in the 1990s, and started doing so again.
You should be indifferent to the company's dividend scheme since it's the underlying business activity that drives total returns, and not its distribution policy. There is all sorts of magical thinking when it comes to dividends:
* https://canadiancouchpotato.com/2011/01/18/debunking-dividen...
* https://pwlcapital.com/the-irrelevance-of-dividends-still-a-...
A pyramid scheme can run out of people to keep it going: the stock market is in a sense a 'savings scheme' for future consumption. Younger people work and turn their cash into savings, older people take their savings and turn it back into cash: as long as young people need to think about the future, and older people / retirees need to pay bills, there's a mechanism to maintain this cycle.
And then you describe how the secondary stock market requires 'fresh blood' to whom to sell stock to cash-out.
It's precisely a legalised pyramid scheme that always needs someone to come in at the bottom hold the bag to let someone else cash-out. In turn they need someone to come in 30 years later. That's exactly how a pyramid scheme works.
The entire economy is a pyramid scheme: the expenses of some people (shelter, food, clothing, entertainment, etc) are the income of other people (landlords/mortgages/property taxes, farmers/grocers, etc). It's why, during economic downturns, personal virtues (saving) can become vices from macroeconomic perspective: if everyone is saving, no one is spending, and so producers/suppliers lose their income (and generally start laying people off, which causes more saving / less spending).
At any given point in time, if no one spends, then no one has income.
This was the 'innovation' of Keynes in the 1930s: use government spending to 'induce' demand to get the cycle going again:
* https://archive.nytimes.com/krugman.blogs.nytimes.com/2015/0...
For a stocks point of view: if no one is currently saving, then those that need income will lose it. At any given point there are folks who need to save/buy and those that need to spend/sell.
That's exactly the question, though, since a lot of stocks seem priced disproportionately to their business activities.
* https://en.wikipedia.org/wiki/Keynesian_beauty_contest
Plenty of folks may think these companies are garbage but are 'playing along' because it's not necessarily what they themselves think that is important, but what others think. You can make money in a bubble, even when it eventually pops. What we're seeing now is hardly new, either:
* https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
This is why I stick with index funds, as I don't really can't be bothered playing the game:
* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
I generally check my portfolio once a year, in January, when I top things up when new contribution room becomes available with the new year. It's 'fun' to follow along with the gyrations and drama as things happen, but I don't sleep over it. If you're reasonably diversified you can generally weather storms and come out okay on the other side:
* https://awealthofcommonsense.com/2014/02/worlds-worst-market...
* https://www.forbes.com/sites/advisor/2010/09/13/its-not-real...
Everyone is happy enough to give Elon (and others) more and more leverage to buy politically strategic companies (this is not that, this is probably just an ego buy for him, something to kill time because he can).
I was worried about him selling out (from an overall market and even index perspective when they were going to bend rules), but it looks like largely the whole situation is predicated on the idea that he can't or won't sell. I don't know how exposed the market is but it doesn't feel good.
No shit. That's why, even if it's an exaggeration to call the entire stock market a pyramid scheme, you can't justify the claim that it's entirely "underlying business activity that drives total returns". That's the real question (from which dividends are, yes, a distraction).
The S&P 500 index tracks earnings per share (EPS) fairly closely over the decades:
* https://www.macrotrends.net/1324/s-p-500-earnings-history
A lot of folks think the top ten stocks in the S&P 500 making up ~40% of the capitalization is bonkers, but they also make up ~40% of the net income share:
* https://en.macromicro.me/collections/34/us-stock-relative/14...
So from an earnings/income perspective, there appears to be a link between the two.
Perhaps worth noting that the US markets seem to (only?) outperform when tech is outperforming, with other US non-tech sectors basically performing the same as out countries' non-tech sectors:
* https://ofdollarsanddata.com/do-you-need-to-own-internationa...
There are other ways for performance to translate to the investors directly. For example, if the company sells itself then all the shareholders will get that payout. Stock buybacks are a thing. And, as other commenters here have said, eventually the company may start paying a dividend
But, you're not entirely off-base in that you're just buying into the vibes of a company. It's just that most of the time (much of the time?) those vibes have been rooted in some semblance of rationality, that there was something of value behind the shares you're buying. That is definitely not universally true anymore
Most stocks give voting power even if they don't pay dividends. Notably, SpaceX's don't.
I mean that can apply to anything. There's nothing intrinsic about gold that makes it valuable other than it's rare, but there's plenty of things that are relatively rare that aren't valuable. Yes there's industrial uses of gold but that's not why we as a society and a species treat it as valuable
Maybe bitcoin is the new gold and will hold value forever, and as more serious people get into it, it will lose its volatility and be less subject to the vibes shifting and there being a run on the market. Maybe not
It is different from Elong stocks, though, because the myth of Satoshi aside, it's not exactly a cult of personality like his companies are
A decade ago it was under $1000 and has never been that low since. It's peak price is only about 2x the current price.
And being higher over 10 years has little to do with it if acts counter cyclical to stocks and other assets.
BTC has been called many things at many different times. It was originally a payment system:
> A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.
* https://bitcoin.org/bitcoin.pdf
And it can still be used for that, however the transaction throughput is tiny, and so it became a store of value in essence: but it's kind of hard to be that when the value swings up and won so much. While "fiat" currency inflation is annoying, it is, generally, fairly predictable in most cases (<4%) and so you can plan ahead with regards to future value and purchase. The same is hardly true of BTC.
Even companies have some value after a crash and you could make a case that at some arbitrary point it was worth $x and since the crash didn't cause the company to crater to below $x it has not "crashed". Even companies filing for bankruptcy have some residual value above what they might have been founded on - it doesn't mean the company hasn't gone bankrupt.
To be more specific, I have often seen people argue for including crypto in a portfolio based on the theory that if equities drop a lot (25, 30%?) crypto will hold or go up. People make the same argument for gold.
The total addressable market even at Space X's own calculation for space launches is only $370 billion. And, supposedly as the only company that can launch things into space they are still losing money on that business. This is bankrupt-a-casino levels of incompetence
They're making money on telecoms, and may have just started making a profit on renting out the data centres they originally built for the AI that it turned out hardly anyone wanted to actually use.