This seems like a silly question, but the more I ask it, without getting an answer that seems to make any sense, the more I wonder. I’ve tried asking Cecil, but his staff’s response just doesn’t seem to answer the question.
Everything that has value has that value because someone wants to own it. For example, you were willing to pay money for a shirt because you wanted to wear it, a steak because you wanted to eat it, a book because you wanted to read it, ect. But, why would you want to own a stock? What can you do with it? I suppose you could take the actual certificate and burn it for heat, or use it for note taking, but I doubt anyone would want to do that. Now, the common response I get from friends is that people want to own stock to make money. But…how can they make money if no one wants to own the stock in the first place? For example, the store owner who sold you that shirt had to buy the shirt in the first place. And he didnt’ want to own it himself, he bought it to sell to someone, someone who turned out to be you. However, you were only willing to buy it because you wanted to own it. If the shirt was hideous looking, and he knew that no one would buy it, the store owner would never have bought it either. Same thing with real estate. I might not want to own that plot of land myself, but I buy it so that I can sell it to someone who does want to own it and build a home on it. With stocks, no one wants to own them. I buy it to sell it to someone who only wants to sell it to someone who only wants to sell it, and so on and so on. Ultimately, nobody wants it, and if nobody wants it, how can it have any value at all? Why are people paying money for something that nobody wants to own? Oh sure, there are exceptions, super rich folks who want to own enough to take over a company, or perhaps own stocks that pay dividends, but in most situations, this is not the case. The entire stock market just seems like a giant game. The money a company is making, or losing, interest rates, new products, market share…none of that matters. It’s all just one big fraud!