3The U.S. Stock Market:What’s Wrong with This Picture?
Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.
Nobel Prize laureate Paul Samuelson
Businesses increase in value over the long term because their distributable profits rise. That is, stocks go up because dividends go up. Share repurchase programs, as an alternative to dividend payments, are a bad idea. Given those assertions, there’s something not quite right about the U.S. stock market. Can you see what it is? I’ve referenced before the low dividend payout ratio (dividend/profits) of the S&P 500 Index companies and the low dividend yield (dividend/price) of an investment in the S&P 500 Index. Now I want to address ...
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