[lbo-talk] stock valuation without dividends

Doug Henwood dhenwood at panix.com
Wed Aug 10 09:13:14 PDT 2005


Charles Brown wrote:


>Are there any studies of what percentage of people playing the stock
>market are able to sell their stock at a profit ? What is the ratio of
>winners to losers in the stock market ?

The old saw is that 80-90% of futures traders lose money. Dunno about stocks, but if people trade actively, rather than just buy & hold, they're lucky if they break even. (On average, that is - there are always lucky and/or skilled exceptions.)


>Why is there such confidence that there will always be somebody who the
>stock can be "unloaded" on in the future ? Is it that a sucker with money
>(or 1000) is born everyday ?

Yup. There's a "rational bubble" in finance theory - i.e., it's "rational" to buy an overvalued speculative stock today if you think you can find someone to sell it to at a higher price tomorrow.

Doug



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