Subject: a stocks and dividends question
From: Tom Lord <lord@emf.net>
Date: Thu, 9 Jan 2003 14:59:41 -0800 (PST)



No, not about "double taxation".

I have a conceptual model of stocks: that they are a floating loan, of
sorts, to the issuing company, in which the principle is almost never
collected (only during buybacks), but non-deterministic interest
payments are made in perpetuity (and thus, eventually outweigh the
principle).  This is different from the more usual (and literal) model
in which stocks are seen as fractions of ownership.  And, to be sure,
the loan model talks only about the financials -- not about voting
rights.

From that financial perspective, stock valuation, if it isn't a
pyramid scheme, has to be rooted in expected dividends.  Otherwise,
what is the basis of the value?  The political control of the votes?
That's so weak and outside of the money system that I don't believe it
is the basis for most valuations: acquisition (the one substantial
source of political value) is not the expected outcome for most
companies and, anyway, a pyramid of acquisitions is a pyramid
nonetheless.

So, is that a bogus view?   If not, why aren't dividends a more
prominant factor in valuation?  (So, maybe this _is_ about double
taxation after all.)

One problem with that view that I see is that pure valuation plays 
can take decades -- so it's not merely a pyramid scheme, but a 
multi-generational pyramid scheme in which responsibility can be
evaded on scales comperable to human lifetimes.  Seems like a bug.

-t