Sorry if the below seems like a conspiracy theory. It probably is, but I probably don't understand something. (This has bugged me to no end as long as I can remember.)
Okay, so here is what I understand about the stock market?
- The main way money enters the stock market is through investors investing and taking money out.
- The only other cash flow is in through dividends and out when businesses go public.
- In a Ponzi scheme, there is usually some small source of income to hide the fact that it's a Ponzi scheme. Dividends are pretty insignificant. For the purposes of this question, we will only consider non-dividend stocks.
- When you buy stock, it is claimed that you own a small portion of the company. This statement has no backing, as you cannot exchange your stock for the company's assets.
- For example, if I bought $10 of Apple Stock early on, but it later went up to $399, I can't go to Apple and say "I own $399 of you, here you go it back, give me an iPhone." The only way to redeem this is to sell the stock to another investor (like a Ponzi Scheme.)
- The stock market goes up only when more people invest in it. Although the stock market keeps tabs on Businesses, the profits of Businesses do not actually flow into the Stock Market.
- In particular, if no one puts money in the stock market, it doesn't matter how good the businesses do.
Based on the above, it seems like the Stock Market has little to do with investing businesses to create growth, and primarily grows in a similar way to a Ponzi Scheme. (Some differences include that it is Stochastic (so when it collapses, it can be blamed on luck or the economy) and it has no top operator (similar to a Pyramid Scheme)).
Am I missing something? Does the stock market create value for investors?