When you buy stock in a company, theoretically at least, you become a partial owner of that company. The reason to own a company is that hopefully the company will make money now and in the future. If a company does make money it can either be re-utilized or used to increase the companies value. Either way a profitable company increases value to the investor while an unprofitable company decreases value.
Now, the other aspect is whether the company will continue to make profit and maybe even increase its profitability via growth. However, suppose you had a company that produced a steady income stream, now and into the future, with no particular growth aspect but by the same token a steady business where profitability could increase via productivity improvements and possibly acquisitions, would it be a worthwhile investment? For an investor the answer is definitely yes but for a speculator, that company is of little to no interest. It isn't likely to see significant price movement so the ability to make a short term profit is limited.
Now I maintain that the investors are being driven out of the stock market by the speculators. The market, instead of a place where companies can raise money by selling stocks and bonds is becoming more and more a casino. This casino aspect is making regular people/investors take ridiculously low bond returns when perfectly good stocks pay higher returns via dividends. One reason for this is that many funds buy the S&P basket of stocks and try to maintain it in balance. So, when the speculative stocks go down, money is pulled out of the funds and they have to sell off all positions.
So investors see excessive volatility in stocks that should have little. They don't want this so they get out. Of course less investors increases volatility as speculators dominate the trading. I think we see where this is going.
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