[docbrown]

I really hope these past eight months cement the idea in more peoples head that the stock market has little correlation to reality.

It fluctuates based on personal sentiment from institutions and money managers. Political policies may drive the market to react in a certain way from time to time but the only real 'direct' effects come from whichever Fed Chair is appointed at the time.

[jeofken]

A stock is a voting right in a company, which among other things can be used to vote for distributing dividends to stock owners.

That is what gives it value to the purchases of the stock.

It is purchased because the buyer expects to earn more from it than they paid, and that they likely can pass it on later.

The value of stocks is certainly connected to real value, and it is one of humanity’s greatest inventions.

[docbrown]

Of course stocks have real tangible value or else we wouldn’t be able to buy and sell them. They’re not something that you barter with.

However, the majority of Americans do not associate stocks with voting rights. Only a slim minority of Americans own stocks to begin with!

Most laymen investors or readers believe that the stock market is an indication of how well our economy is doing — which it’s not.

The value of the stock market, like you said, is based on the buyers expectations. Which is what I said: the market is controlled by institutions and money managers. Those are the majority of your buyers.