> This is about the myopic quarter to quarter focus on profits by the market, the stock market in the last 30 years has been increasingly unable to to focus on the long game - if it does generate income or profit by the next quarter, its rubbish.
I've seen this sentiment about the market like, forever. Yes, I've been investing in the market for 30 years.
But I seriously doubt that investors are so stupid. If they were pushing up stock prices based on quarterly results and the long game be damned, then where are all the smart investors shorting those companies? Are you making money on shorts?
And, why are there companies like Amazon with enormous P/E's? Clearly, investors are playing the long game with them.
You sorta made my point for me. My argument is that the market wants quarter to quarter growth over stability. There are many industries that are stable, generate lots of revenue, are profitable, but do not generate high stock prices because of no growth, like:
My argument is before the mid 80's - the focus was on the dividend not on the stock price itself, IMO, buying and selling based on stock price, rather than earning disbursed to shareholders, is merely speculation, rather than investing.
The focus on dividends vs stock appreciation is driven by the difference in tax treatment of the two. Tax policy has alternately favored one over the other, with the predictable resulting shift in investor focus.
Saying stock purchasing anticipating future growth in the stock price as "mere" speculation is very incorrect. A company can choose to issue a dividend or repurchase stock (thereby pushing up the price), these are economically equivalent. The choice is made based usually on tax treatment.
I've seen this sentiment about the market like, forever. Yes, I've been investing in the market for 30 years.
But I seriously doubt that investors are so stupid. If they were pushing up stock prices based on quarterly results and the long game be damned, then where are all the smart investors shorting those companies? Are you making money on shorts?
And, why are there companies like Amazon with enormous P/E's? Clearly, investors are playing the long game with them.