I understand there are advantages to buying stocks and reaping dividends. Remove dividends from my question as well as owning voting rights in a company. What I don't understand is why we expect a stock to go up when a company does well.

We expect demand to outweigh supply and the stock to go up. When a company does well, in most cases the stock price rises. But it feels to me like there is an unwritten rule or contract that says when a company does well, we the people will buy the stock when there is no logical connection between a company doing well and the stock going up besides the knowledge that people will buy more stock when the company is doing well. It's as if we are willing the stock up and we all agree that for this game the better a company does the more we want to own it. But this isn't baseball cards where there are people who want to own a card as a collector and couldn't care less if the value goes up.

I understand wanting to own a stock because it pays dividends. But in the end the whole thing feels like a game where we buy simply because we think others will want to buy but the catalyst is only real because we trust in each other to follow the rules.

The only logical thought I have is that small traders don't matter at all. In the end my question is, why does a well performing companies stock make people want to own it more than sell it?

  • A share is fractional ownership of the company. Unfortunately, as discussed elsewhere, because share prices react to expected values, trading prices don't track directly with the value of the company.
    – keshlam
    Dec 27, 2022 at 2:28


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