Does investing in a company support it?
Would you consider the owner of a company to be supporting the company? If you buy stock in the company you own a small part of that company. Your purchase also increases the share price, and thus the value of the company. Increased value allows the company to borrow more money to say expand operations. The affect that most individuals might have on share price is very very small. That doesn't mean it isn't the right thing for you to do if it is something you believe in. After all if enough people followed those same convictions it could have an impact on the company. "We're not ""helping"" the company in a comparable sense to donating money to a non-profit.  As you wrote, investing in a company deals with ownership and in a sense, becoming a part owner of a company, even if it is a minor ownership, indicates that we sense it has some sort of value, whether that's ethical, financial or tangible value.  As investors, we should take responsibility and ensure that our voices are heard when voting occurs (sadly, not too common). EDIT: @thepassiveinvestor makes an excellent point that this paragraph only applies to IPOs: Keep in mind, when we purchase stock in a company, that money is used for business purposes.  It also signals value to the market as well, if enough money or enough investors buy the stock." As others have said, it simply makes you a part owner. Even if you have ethical objections to a company's behavior, I'd argue that investing in it and using the proxy votes to influence the company's decisions might be even more ethical than not investing. As said by others, buying shares of a company will not support it directly. But let's think about two example companies: Company A, which has 90 % stocks owned by supporters, and Company B, which has only 1 % of stocks owned by supporters. Both companies release bad news, for example profits have decreased. In Company B, most investors might want to sell their stock quickly and the price will plummet. In Company A, the supporters continue believing in the company and will not want to sell it. The price will drop less (usually, but it can drop even more if the sellers of Company A are very desperate to get rid of the stock). So, why is it important for the company to have a high stock price? In the short-term, it's not important. One example is that the company can release more stocks and receive more financing by doing that. Other reasons are listed here: http://www.investopedia.com/articles/basics/03/020703.asp
"&gt; Thank you for the wealth of information!  Sure, I hope my opinions are food for thought.  &gt; 1) Does that basically translate to ""less tax on poor/wealthy...to promote entrepreneurship?  No, your typical entrepreneur is a smart, disgruntled employee who thinks they have a better way to do a job.  If you want more entrepreneurs, you should do things to help them succeed in a new company and minimize the risk.  Some ways to do this:  * Create a government agency that offers programs that help new companies.  Guidance and funding are obvious candidates.  Advertising for small local business would help too.  One of the most important would be getting complementing talent together because a start-up needs the talents of at least four different people to have a good chance of succeeding.  * Establish guaranteed health care.  A 40-something with a wife and kids may have a great idea but can't risk to leave his family with no health insurance for the two years it would take to get his idea off the ground.  * Better enforce anti-trust law.  I believe small companies are stifled by big companies because the latter control too much of the market.  If you want competitive markets you need to either break-up or handcuff and monitor the big players.  * Create a better safety net.  It is a lot easier to go on your own if you know at least you won't starve.  &gt; 2) Rich using money to grow their own wealth. But wouldn't that mean as a byproduct, jobs will be made?  In theory, yes, but I believe in practice the opposite happens.  Big companies can make significantly more money hoarding their market share rather than branching into new markets.  Here's a true story of my last company with names changed:  Company A makes widgets.  Company B makes bookkeeping software for tracking widgets and is very successful, controlling a majority of the market.  Company A buys Company B at an inflated price.  The government allows the sale on the condition that Company A does not use Company B's information on the widget market to gain an unfair advantage.  Company A agrees and the buyout takes place.  Company A then approaches all of Company B's customers and says, ""Let us look at the data on your bookkeeping software and we will give you a 5% discount.""  Most customers agree so Company A now has all the data controlled by Company B but this is not illegal because they got it from Company B's customers, not company B.  Company A proceeds to undercut the market because it now knows exactly how much their competitors widgets sell for.  Company A now controls a majority of the widget market and their market share continues to grow rapidly.  By the way [here is that Bloomberg article I described earlier about repatriation being about buyouts](https://www.bloomberg.com/gadfly/articles/2017-05-08/theory-of-tax-repatriation-is-better-than-the-reality).  &gt;&gt;  Take home money is used for investment. It isn't.  &gt; 3) I don't think I understand this one at all. Will you rephrase it for me?  The argument is that we need to tax corporations less so they can invest more.  Here's the problem -- investments are not taxed.  A corporation's tax is a percentage of their gross income minus their expenses.  Investment is an expense.  Therefore the more they invest, the lower their tax bill.  If you want companies to invest more, raise their tax rate.  &gt; 4) I did hear from my professor and the educational videos he had shown us that the capital tax is one of the highest among the other OECD nations.  I need to walk back what I said earlier.  The US corporate tax rate is one of the highest.  Does that mean US corporations pay the most tax?  Well, [it's complicated](http://www.npr.org/2017/08/07/541797699/fact-check-does-the-u-s-have-the-highest-corporate-tax-rate-in-the-world).  &gt; ...why can't we just close loop-holes instead of choosing to slash capital tax?  Note that those go in opposite directions.  Closing loopholes would make companies pay more.  Slashing capital tax would have them pay less.  Perhaps doing both would be revenue neutral.  I would be in support of that because I suspect loopholes benefit big companies a lot more than small ones because they have the resources to find and exploit those loopholes.  That said, people in power have been talking for 20 years about ""closing the loopholes"".  They never do.  [CGP Gray has an excellent video explaining why these loopholes are not going anywhere anytime soon](https://www.youtube.com/watch?v=rStL7niR7gs).  &gt; 5) I think it's in each company's best interest to further their own agenda, and that agenda usually means bad for the majority.  Yes, that's a much better way of saying what I meant.  &gt; Thank you in advance for your time.  Sure, thanks for thinking, asking questions, and making up your own mind." "The implication is market irrationality is stronger than market rationality. Aka nothing makes sense when TSLA climbs to $400 or when CMG rises to $750.   I wouldn't say there is a systematic flaw in valuation. I think there is just a lot of ignorance. Markets are more open to household investors than ever before. You used to go to your broker and ask him what's up and he'd give you the inside scoop since you pay them money. Now you go onto marketwatch and get some random nobody's opinion on everything and make stock selections based on that.   But eventually the chickens come home to roost and things will correct itself. Big players will jump ship and cause signals to other traders to jump ship. The public can pump stocks up pretty high but it doesn't just go to infinity. Eventually someone will stop and say, ""wtf is going on"" and start selling. Stocks are sold on a basis of a limit order book so it's real prices that people are paying. People don't care about prices currently because most don't have any finance knowledge but want to invest their own money.  They just hear about Tesla doing something amazing (from some clickbait article or news outlet) and can't stop thinking about buying Tesla. They go to Chipotle and think ""wow this place is so good and hip, they must be a great investment"".   The markets have been filled with more subjective analysis than ever before especially with so much low quality information at your fingertips. Equally ignorant people startin blogs about investment and personal finance being shepherds for other ignorant people. In the end they all lose.  People who exclaim ""this stock is going up to $250 easily"" with literally zero quantitative analysis or even a baseline reference point to back it up are prime examples of this.   Ignorance of markets and cheap money almost always lead to market runs that end catastrophically. Dot com bubble, 1929 market crash, 2008, it's always the same. People who have no business taking loans out or buying on margin or leveraging positions with debt only to get fucked over once things are brought back down to Earth. After 2 runs of QE, we now have cheap money and with everyone being a crier for their personal investment strategy, we now also have rampant ignorance.   I don't expect things to last but no one can call the bottom or the top, or else you'd be very very rich. Have a safe portfolio, don't try to time the markets. Have a strategy that hedges against unexpected change, don't try to gamble on this change. Because it's ultimately impossible to predict the movement of every single person on this earth that invests their money into markets. So don't try. Just be prepared.   ----  To expand further into valuation theory:  at the end of the day, people invest their money to make more money.  It's as simple as that.  If your money doesn't grow in an investment vehicle, it's ultimately a shit investment.  But no one values intrinsic value of a company's equity before they decide whether or not $380 for TSLA is a good/bad deal.  As a result, stocks can be pumped up way higher and people still see the gains on their stocks through capital gains fueled by other optimistic investors.   Non-zero sum goes both ways.  People can make shitloads of money on stock without an equitable loser--people can also lose shitloads on stock without any real winner emerging from the rubble.  When this bubble bursts, lots and lots of people will lose money on TSLA when people's expectations become rational and they stop paying $300 a share for a negative or 70 PE ratio.  It's insane what multipliers people will pay for these companies without even realizing the implication--if you buy a share of a company with a PE ratio of 70, you just paid 70 times their earnings for a share.  In an ideal world where they released every single penny of earnings as dividends, it would take you 70 periods to reclaim your money on that share.  This obviously doesn't take into account capital gains, but capital gains aren't supposed to be this irrational to where a stock can be pumped up into 70x PE ratio in the first place.  It's a whole messed up web of confusion and irrationality and eventually something will catalyze a reaction.  Imagine a market where everyone just agreed to pump up a single stock to infinity and everyone just rakes in shitloads of money.  Would this work?  Of course not.  It's literally a pyramid scheme that relies on future generations to constantly inject capital--no real value is being created by this scheme.  It requires constantly more future generations to continue adding money into the scheme and will crash once people stop pumping money into it.  The same thing will happen here.  Everyone ""agreed"" to pump up TSLA (in a sense) but eventually people will realize this is stupid as shit and the pyramid will come tumbling down because there is nothing they receive from this scheme other than the money from other people.  It's essentially moving money around, making 0 use of it, until people stop pumping money into the system and everyone realizes that nothing of real value had been produced through the use of this money.  Ultimately the only thing that creates real value is the money that is returned to shareholders from an outside party--the company you're invested in.  Real value is not created when people exchange stock and money.  So why do these transactions create higher values in equity?  The basis of equity valuation states that dividends are the only way for companies to raise the price of their stock, going off the traditional Dividend Discount Model.  And theoretically, that's the only logical explanation.  Buying and trading stock does nothing for the company, minus T Stock they might own.  Ultimately the only party creating real value is the underlying company.  If they aren't creating real value, then their stock should not be increasing, period.  The way they create value is by efficiently utilizing assets to generate returns on investment which can be returned to investors through dividends.  Dividends can only be increased (while maintaining an equitable payout ratio) by generating more net income that can increase the actual pool of money that can be allocated back to investors.  TSLA does not do this.  TSLA regularly loses money and overpromises.  There is no logical explanation for any of this except that everyone is irrational.    Obviously theory is not the same as in practice but the theory is important here because it's really the basis for any investment at all.  At the end of the day, a share of stock is the right to a share of the company's equity.  People own equity in companies because companies generate money that it returns back to its owners.  That's what a company does.  That's what an owner does.  If you own shares of a company, you're an owner.  And if your company does not return more money back to you YoY, then why are you invested in them?    Ultimately, you're riding a capital gains wave that will eventually subside once market irrationality succumbs to rationality.  And it always does because the real value always catches up to the fake value that is caused by pumping and dumping stocks." "&gt;It seems that the corporation was ordered to pay, no? The man does not claim he can't pay it, he claims the corporate entity that is supposed to pay it can't pay it.  Exactly.  Robert K (Rich Dad) established a company called Rich Global LLC.  Which was sued by his partners in that company for failure to pay their agreed upon percentage of income.  [From this article](http://abcnews.go.com/Business/rich-dad-poor-dad-author-files-bankruptcy/story?id=17463158#.UHhXSG_A_6M): The company had been weighed down by a lawsuit filed by Learning Annex, one of Kiyosaki's earliest backers who had helped arrange his public speaking events earlier on, Forbes reported.  Bill Zanker, the founder and president of Learning Annex, sued Kiyosaki after he allegedly failed to pay a percentage of profits from his speaking engagements. A district judge in New York awarded Learning Annex $23.7 million.  ""I took Kiyosaki's brand and made it bigger,"" Zanker told the New York Post. ""The deal was I would get a percentage, and he reneged. We had a signed letter of intent. The Learning Annex is his greatest promoter. We put his 'Rich Dad' brand on a stage. We truly prepared him for great fame and riches. But when it was time for him to pay up, he said 'no.' ""   Robert Kiyosaki, author of the book, ""Rich Dad, Poor Dad"" filed for corporate bankruptcy through one of his companies, Rich Global LLC.  A few years ago Robert K started another company called Rich Dad Co.  He shifted all sales from books, seminars videos etc from his first company to the new company.  It seems this was a fantastic stroke of lucky timing - or he purposefully did this while talks were souring between him and his former business partners.  The former company is a shell with very little assets.   That's pretty convenient.  &gt;This man probably runs several businesses.  Yes he does - I have provided examples of this in my previous posts.  &gt;there is a chance some may go under.  Go under?  His book sales are not diminishing, he still does sell out seminars, he is paid for public speaking.  This isn't about a company that failed to become successful.    &gt;If you don't want to invest with someone who doesn't have skin in the game, all you have to do is don't invest.  Are you even aware of who is partners are / did you even read any of the information I have provided to you?  His partners were the people who made him famous.  They backed him and propelled him to the level he is currently at.  They are asking for their fair share of what they created - and a court of law agrees with them.  Robert K screwed them.  Example:  I am a low level motivational speaker.  You are a promoter and believe in my message.  You and I go into business.  My job is to continue to write books, speak and create videos - you back me financially and create a PR and marketing campaign to propel me to a higher level of public awareness.  You do your job and make me famous.  When it comes time to pay you - I reorganize the company and screw you.    I really can't continue this conversation.  I have provided plenty of information, supporting links and examples.  It is clear that you are unwilling or just unable to concede (at ANY LEVEL) that it is even possible that someone would/could manipulate BK laws to avoid liability.  This discussion is turning into the equivalent of someone trying to describe the color red to a blind person.  No matter what I present to you - you just can't see red.  You are obviously entitled to your opinion and just for the record I have not downvoted a single one of your posts - however, due to your instance and firmly held belief that this type of business practice is ""smart business"" I restate that (in my opinion) you are part of the problem.   *edit: Yet more fat fingered spelling mistakes... my typing skills need improvement" "Institutions may be buying large quantities of the stock and would want the price to go up after they are done buying all that they have to buy.  If the price jumps before they finish buying then they may not make as great a deal as they would otherwise.  Consider buying tens of thousands of shares of a company and then how does one promote that?  Also, what kind of PR system should those investment companies have to disclose whether or not they have holdings in these companies.  This is just some of the stuff you may be missing here. The ""Wall street analysts"" are the investment banks that want the companies to do business through them and thus it is a win/win relationship as the bank gets some fees for all the transactions done for the company while the company gets another cheerleader to try to play up the stock." Yes, but only if they're looking for investors. You would need to contact them directly. Unless you're looking to invest a significant sum, they may not be interested in speaking with you. (Think at least 6 figures, maybe 7 depending on their size and needs). This is otherwise known as being a Venture Capitalist. Some companies don't want additional investors because the capital isn't yet needed and they don't want to give up shares in the profit/control. Alternatively, you could try and figure out which investment groups already have a stake in the company you're interested in. If those companies are publicly traded, you could buy stocks for their company with the expectation that their stock price will increase if the company you know of does well in the long run. "Different stocks balance dividend versus growth differently. Some have relatively flat value but pay a strong dividend -- utility stocks used to be examples of that model, and bonds are in some sense an extreme version of this. Some, especially startups, pay virtually no dividends and aim for growth in the value of the stock. And you can probably find a stock that hits any point between these. This is the ""growth versus income"" spectrum you may have heard mentioned. In the past, investors took more of their return on investment as dividends -- conceptually, a share of the company's net profits for the year reflecting the share's status as partial ownership. If you wanted to do so, you could use the dividend to purchase more shares (via a dividend reinvestment plan or not), but that was up to you. These days, with growth having been strongly hyped, many companies have shifted much more to the growth model and dividends are often relatively wimpy. Essentially, this assumes that everyone wants the money reinvested and will take their profit by having that increase the value of their shares. Of course that's partly because some percentage of stockholders have been demanding growth at all costs, not always realistically.  To address your specific case: No, you probably aren't buying Microsoft because you like its dividend rate; you're buying it in the hope it continues to grow in stock value. But the dividend is a bit of additional return on your investment. And with other companies the tradeoff will be different. That's one of the things, along with how much you believe in the company, that would affect your decision when buying shares in specific companies. (Personally I mostly ignore the whole issue, since I'm in index funds rather than individual stocks. Picking the fund sets my overall preference in terms of growth versus income; after that it's their problem to maintain that balance.)" "I think it's hard to say. Companies are going to be much more likely to fail, but every now and then one will be knocked out of the park and become the next pintrest.  I do worry it will attract confidence men. It's easy to ""lose investor money to incompetence.""" I was thinking that the value of the stock is the value of the stock...the actual number of shares really doesn't matter, but I'm not sure. You're correct.  Share price is meaningless.   Google is $700 per share, Apple is $100 per share, that doesn't say anything about either company and/or whether or not one is a better investment over the other. You should not evaluate an investment decision on price of a share.  Look at the books decide if the company is worth owning, then decide if it's worth owning at it's current price.