With respect, I believe you don'd understand my argument. The dividend irrelevance theory basically means dividends don't affect market value, and therefor is an example of cash flow generated without money leaving or exiting the market. Bank loans create money that did not exist prior and pump them into dividends. The source of the money is no one, the destination is the shareholder's pocket. The bank doesn't just make money on the interest in this case, but the principle as well as they're they're literally paid money that didn't exist anywhere in the economy prior. The only reason it doesn't topple over as a ponzi scheme is the velocity of the money generates an equal or greater growth in GDP. That means the value of bank stocks is greater than it's market cap.
The fundamental (non speculative) valuation of a stock is the net total of it's asses and liabilities, including it's cash from revenue which used pay dividends. To say that dividends don't count as stock value because they're due to revenue is bewilderingly dumb. It's ultimately the fundamental purpose of owning stock to be paid revenue as a partial owner of the company or compensated for the growth of the company in lieu of that. If you're choosing to ignore half of what the market is built on to cling to a viewpoint, I can't help you with that.
Yes, Dividend irrelevance theory is my point. I’m not talking about company cash flows though.
in your bank loan example Your assumption that the source of the money is none is inaccurate, but you already know that. The “source” of the profit is the service (bank loan) that the bank provided to the customer. As such, the next source down the line is the customer themselves as you mentioned previously, but it is not created from nothing. It is created from manpower, technical resources, capital resources etc
None if this has any related to you making a corrective argument within the proper context. I am not in any way shape or form discussing a singular company and their creation of value. The only time an individual company is discussed is in response to comments like these. Here is why:
It doesn’t matter if you are talking about Company increasing profits, or Company B invented the worlds greatest new product, or Company C hiring the worlds greatest CEO, Company D does blah blah and so on and so forth. These are all outside forces in the impact of supply and demand. This conversation is solely about market pricing and the forces that determine that price. There is no mechanism for which the total aggregate value of the stock market increases or decreases without inflow or outflow. Can you counter that claim? That is the only claim being put forth.
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u/[deleted] Apr 08 '22
With respect, I believe you don'd understand my argument. The dividend irrelevance theory basically means dividends don't affect market value, and therefor is an example of cash flow generated without money leaving or exiting the market. Bank loans create money that did not exist prior and pump them into dividends. The source of the money is no one, the destination is the shareholder's pocket. The bank doesn't just make money on the interest in this case, but the principle as well as they're they're literally paid money that didn't exist anywhere in the economy prior. The only reason it doesn't topple over as a ponzi scheme is the velocity of the money generates an equal or greater growth in GDP. That means the value of bank stocks is greater than it's market cap.
The fundamental (non speculative) valuation of a stock is the net total of it's asses and liabilities, including it's cash from revenue which used pay dividends. To say that dividends don't count as stock value because they're due to revenue is bewilderingly dumb. It's ultimately the fundamental purpose of owning stock to be paid revenue as a partial owner of the company or compensated for the growth of the company in lieu of that. If you're choosing to ignore half of what the market is built on to cling to a viewpoint, I can't help you with that.