- #1
FulhamFan3
- 134
- 0
I need to have some things cleared up about stock, dividends and earnings.
What incentive is there for me to buy a share of a company? Or probably what my real question is, what influences stock price?
If a company issues dividends then I understand somewhat. People are going to want to own stocks that issue a large dividend so the price goes up because people want to buy them.
What I don't understand is companies like Berkshire Hathaway or Google that don't issue dividends and don't intend to. At which point I am only buying stock to sell at a later date. So if a company that doesn't issue dividends is successful does the stock price go up because the net worth is higher? Or is the only reason a stock ever goes up due to trading?
I'll give an unrealistic example. I own a few shares of a company. The following year the company is worth twice as much as the year before. No shares are traded at all. Is my share worth twice as much?
A company always has earnings whether it's positive or negative but it doesn't always issue dividends. So why do people go nuts for a stock when they hear a good earnings report?
What incentive is there for me to buy a share of a company? Or probably what my real question is, what influences stock price?
If a company issues dividends then I understand somewhat. People are going to want to own stocks that issue a large dividend so the price goes up because people want to buy them.
What I don't understand is companies like Berkshire Hathaway or Google that don't issue dividends and don't intend to. At which point I am only buying stock to sell at a later date. So if a company that doesn't issue dividends is successful does the stock price go up because the net worth is higher? Or is the only reason a stock ever goes up due to trading?
I'll give an unrealistic example. I own a few shares of a company. The following year the company is worth twice as much as the year before. No shares are traded at all. Is my share worth twice as much?
A company always has earnings whether it's positive or negative but it doesn't always issue dividends. So why do people go nuts for a stock when they hear a good earnings report?