Capital in the 21st Century by Thomas Piketty

Many companies pay no dividend at all and the vast majority of dividends that are paid are certainly not tied to company profits. Most companies pay a fixed dividend and many only to certain share class holders. Companies have even borrowed money to pay dividends. There are very few companies whose dividends are an indication of how profitable they are, or will be in the future. P/E does not signify even the probability of a dividend.

The reality of individual stock picking is that it is not much different from handicapping horses. Available information is deployed in an effort to maximize returns and reduce risk but the information is incomplete and the future is entirely unknown so any decision is actually a guess. Investors use historical information but still bet on only one thing, expectation of a future share price increase, which past performance, P/E and dividend ratios are not especially good indicators of over the medium term. P/E ratios tend to be normalized by the market so investors see a marginally higher short term return from a low P/E because of that, which says nothing about the stock's future performance.

The price of any individual stock on any given day are moved first by industry news, second by large investor activity, third by politics, and fourth by news about the company itself. The market itself is moved by money flows and in times of economic uncertainty massive amounts of money flow into US markets because they are considered the safest on the planet. When economic certainty returns this money, and the $Trillions the Fed has pumped into the markets, will begin to flow out and share prices will decline if there is not enough growth in the wider US economy to replace it, which is a somewhat dubious prospect considering the abject failure of median wage growth prospects.

 

You are using the present value of stock equation which isn't the value of the firm, but only the stock. Remember stock prices are just guessing games to as what people value firms, and that to figure out the real value of firms you would have to dig into their books to figure out.

 

I am a leftist and I sincerely hope you are joking. Leftists can enjoy cheap beer and are not required to eat organic foods. Not all leftists have such a strong pretentious streak.

 

You have, as usual, quickly identified the heart of the matter. The problem of concentration must be addressed through firm organization. Further, the mistake of most leftist movements is their refusal to practice leftist labor politics in favor of redistributionist measures. Redistributionist policies are strongly emphasized within contemporary western democracies. However, when not paired with strong labor measures, they create a parasitic relationship that allows the wealthiest to increase their rate of capital return because of the artificially created consumption of lower classes. (Which is consumption unrelated to the process of productive labor.)

In the United States, "liberal" politics provide an ideal mechanism for misleading the public. The party that looks out for the interest of the lower classes creates a political program which alleviates the harshest consequences of wealth inequality while conveniently avoiding any possible. substantive restructure of the mechanisms that created those inequalities.

Despite charges that this theory is alarmist or conspiratorial, the evidence suggests that mainstream, western economic policy is largely a puppet of financial capitalism and its predatory institutions.

 

Well in the US particularly the left was driven out of the labour movement by a concerted effort of business and government.

This created a right oriented labour movement whose sole focus was the short term maximization of members incomes, which is entirely self-defeating over the long term, which was the goal.

Workers in the US and other developed nations have been doomed to an ever declining standard of living because labour organizations never put any concerted effort into gaining capital. If they had they would be the majority owners of every major corporation in the world by now. The few times that labour unions tried to gain ownership were always with firms that were already in deep financial distress so it was easy for the financial community to drive the firm into a bankruptcy reorganization, which would make all shares, and the unions ownership worthless.

The trend is quite clear, future income growth will be accumulated by owners of capital and wage income will continue to decline. The point is not so far off where the majority of national personal income will be from capital investment. The inevitability is that massive portions of the population will be left with no way to gain income from the economy since there is no need for their labour.