> There is often a sound reason to sell but, if the transaction is a fair one, the reason is not so that the seller can become wealthier.
It's a challenging statement in a world where pre-revenue startups can sell for $xM, and instructive about how the rest of the world works.
So I don't really see the challenge. Pre-revenue just means higher risk and a bigger discount.
Ah, the zero-sum game deception. That only works in the short term, else the world economies wouldn't be able to support a population that is double what it was 30 or 40 years ago.
That doesn't mean I disagree with the statement that capital assets are not valued purely on future earnings.
This is very unusual. Typically stocks in the same industry are highly correlated.
A company with negative growth rates still has a value (not sure what negative interest means in this context). An example is liquidations, which can be very profitable investments.
"A stock's present value is also based on it's likely future value, which is in turn based on market forces and geopolitic". The more I read your post the more I think you confuse price and value.
Lets say I find a stock trading at 5x earnings, with a good moat, and earnings growing at only 5% a year, so it obviously looks like a bargain.
But lets also assume I have a magic ball that can tell me a stocks future, and it says this company will never trade for anything but 5x earnings. I'm still buying it, not only am I getting a 20% a year return on my investment (as my imputed share of profits), but that return is going to grow over time. At some point they will either buy back stock, increasing my share of their profits, or pay me my profits in dividends.
In the meantime I can let the value grow, even in this "slow growth" business.
But it will have a future value based on the potential future future future cash flows.
Sometimes you can have a startup you're [i]not[/i] obviously poised to make significantly money with which poses a threat to a major player's significant revenue stream, or has IP or eyeballs they value. This seems to be the case for a surprisingly high proportion of tech acquisitions.