As far as I understand, the only thing that investor really get from the company’s profit is mainly from dividends. So, all other P/E ratios, fundamental analysis, chart analysis, etc for stock price growth are no better than just looking into a fortune-teller’s crystal ball? Stock prices seems to be almost entirely driven by “market forces” aka what people feel about the company. Whatever those “expert” analysts say seems to be just trying to put meaning into something that really doesn’t actually impact the stock price, not much difference from horoscope? There are many big profitable companies with almost flat stock prices and there are also companies without any real profits but the stock prices skyrockets.
In: Economics
The price of a stock (or anything) is simply what people are willing to pay for it. No one sets the price, apart from the IPO where an investment bank will, and it’s hard to do. You can try and figure out the rationale for why something is priced a certain way but it’s a fools errand imo, it just comes down to whether people are buying it. Why are they buying it at $X? Who knows, but they are, and the price will stay there until they stop, in which case the price will go down until people start buying again.
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