I know I'm missing something here, so I am posting the following. Let
me start off by saying I have not "lost" money in the stock market -
I'm just an average guy who works for a living and contributes to his
401K. These are just a series of questions I have had for years and
cannot seem to get a satisfactory answer.
Let's say I buy a share of stock of a company on NASDAQ (for example)
that does not pay dividends. I am now a part owner of the company.
When the company makes a profit - or the prospect of future earnings
increases, the stock price may go up. I have a paper profit. The
company does not give me a piece of the real profit. It may be
reinvestmented in the business, etc. But I don't get any of it. I do
get the appreciated value of the stock. Now, I sell the stock and get
my profit. The guy who buys my stock hopes the stock appreciates as
well.
So, my questions center around this: what am I buying when I buy this
stock? Aren't I buying the hope the stock price appreciates so I can
sell at a profit? I am not going to ever actually recieve any of the
profits the company makes - no dividends. In fact I am not investing
in the company at all. The company doesn't get the money when I buy
the stock - the stock wasn't sold to me out of the company's treasury
(the seller of the stock gets my money) - and even the cpmany does
sell the stock to me, I still do not get a portion of future
profits.
In conclusion, how am I "investing" in anything?
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