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Comment by yuhong | Hacker News Reader

Personally I think expecting stock price to always increase is horrible these days.

I agree somewhat with that. I can't place my finger on it, but there's something I don't like about growth needing to be the norm... but that's a whole new topic.

Regardless, the opportunity for profit is why people purchase public shares of a company. Profit can only be made by an increase in share price (assuming no splits) or dividend payout (i think).

EDIT: realized there are many other ways to make money (sell short, derivatives based on price volatility, etc) but i think my point is still valid that the shareholders of a company want growth in share price or they'll invest their money elsewhere.

The reason you always expect growth is because as a company retains earnings its total assets grow. You expect that given more money you should earn more money. If you get to a point where you're earning the same amount but require more assets to do so, you are going to get a lower multiple on your earnings. The other option is to payout all your earnings as dividends but the problem there is double taxation(if you live in a country that taxes dividends) which lowers the value of those earnings to the investor.

Your discomfiture is well placed:

  http://www.youtube.com/watch?v=F-QA2rkpBSY

The world is mostly logistic curves, but the ponzi needs us to all believe in exponential curves.

TY for the link. Another example of a great lecturer being able to make up for a dry subject matter.

Just a clarification for those (like me) who didn't get it:

A logistic curve is basically an S-shaped curve, also known as a sigmoid.

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