> The value of a corporation is inevitably linked to its profits.
> Again, it all boils down to expectation of future profit.
Maybe you feel these are equivalent statements. I don't. I think they are fundamentally different. People's expectations about a company's future profitability are, to me, entirely different from a company's actual profit. Blue chip companies have stock values that are tightly tied to their actual profit, unless there's some reason to think they might be on the verge of some sort of breakthrough that will make the stock price climb dramatically (because of anticipated future growth). Non-blue-chips have stock values that have a substantial component derived entirely from 1st, 2nd or 3rd order expectations about profit, and this can move stock prices dramatically even though there is no actual change in the company's profitability.
So, if you had only said "it all boils down to (1st, 2nd or 3rd order expectation of future profit", I'd agree with you. But you started by saying "the value of a corporation is linked to its profits", and I can't agree with that except for blue chip (type) companies.
> The value of a corporation is inevitably linked to its profits.
> Again, it all boils down to expectation of future profit.
Maybe you feel these are equivalent statements. I don't. I think they are fundamentally different. People's expectations about a company's future profitability are, to me, entirely different from a company's actual profit. Blue chip companies have stock values that are tightly tied to their actual profit, unless there's some reason to think they might be on the verge of some sort of breakthrough that will make the stock price climb dramatically (because of anticipated future growth). Non-blue-chips have stock values that have a substantial component derived entirely from 1st, 2nd or 3rd order expectations about profit, and this can move stock prices dramatically even though there is no actual change in the company's profitability.
So, if you had only said "it all boils down to (1st, 2nd or 3rd order expectation of future profit", I'd agree with you. But you started by saying "the value of a corporation is linked to its profits", and I can't agree with that except for blue chip (type) companies.