Based on your financial expertise, provide your response or viewpoint on the given financial question or topic. The response format is open.

How exactly does dealing in stock make me money?
Generally, a share of stock entitles the owner to all future per-share dividends paid by the company, plus a fraction of the company's assets net value in the event of liquidation.  If one knew in advance the time and value of all such payouts, the value of the stock should equal the present cash value of that payout stream, which would in turn be the sum of the cash values of all the individual payouts. As time goes by, the present cash value of each upcoming payout will increase until such time as it is actually paid, whereupon it will cease to contribute to the stock's value. Because people are not clairvoyant, they generally don't know exactly what future payouts a stock is going to make.  A sane price for a stock, however, may be assigned by estimating the present cash value of its future payments.  If unfolding events would cause a reasonable person to revise estimates of future payments upward, the price of the stock should increase.  If events cause estimates to be revised downward, the price should fall. In a sane marketplace, if the price of a stock is below people's estimates of its payouts' current cash value, people should buy the stock and push the price upward.  If it is above people's estimates, they should sell the stock and push the price downward.  Note that in a sane marketplace, rising prices are a red-flag indicator for people to stop buying.  Unfortunately, sometimes bulls see a red flag as a signal to charge ahead.  When that happens, prices may soar through the roof, but it's important to note that the value of the stock will still be the present cash value of its future payouts.  If that value is $10/share, someone who buys a share for $50 basically gives the seller $40 that he was not entitled to, and which the buyer will never get back.  The buyer might manage to convince someone else to pay him $60 for the share, but that simply means the new buyer is giving the the previous one $50 that he wasn't entitled to either.  If the price falls back to $10, calling that fall a "market correction" wouldn't be a euphemism, but rather state a fact: the share was worth $10 before people sold it for crazy prices, and still worth $10 afterward.  It was the market price that was in error. The important thing to focus on as a sane investor is what the stock is actually going to pay out in relation to what you put in.  It's not necessary to look only at present price/earnings ratios, since some stocks may pay little or nothing today but pay handsomely next year.  What's important, however, is that there be a reasonable likelihood that in the foreseeable future the stock will pay dividends sufficient to justify its cost.