- Apr 2010
- T'Republic of Yorkshire
Share prices are a reflection of investir expectation of a company's future performance based on what the investors know, NOT a reflection of their current position (though that future expectation might be based on their current position), and how much demand there is to buy those shares. It does not reflect the performance of the economy, except that if the economy is on the rise, investors expect companies to do well. And if more people want to buy a share, the price will rise regardless of how well the company is doing. Ever heard of a pump 'n' dump?It's best we just say that we have fundamentally different views on the way the world works. For you to say things like stocks don't reflect a companies financial figures is mind boggling to me. I'm confused with your entire response. You're talking about sub-prime mortgages, you're all over the place. Do you know what happened in 2008 exactly?
I don't think there is anything left to discuss. You can have your opinion. We can revisit this next April when the economy has crashed. I'll remember to remind you, don't worry..
Dan's point is that due to tax cuts, companies have money to buy back their own shares, thus inflating demand doe those shares and raising the price. They are not investing that money into expanding and improving their business.