@DrDog said in Divedends do NOT drive the market in any way, shape or form.:
It’s really very similar to the stock market. Dividends play a part, but lots of companies don’t pay dividends for years and their share price still rises. Prices rise or fall based on basic economics of supply and demand. Demand varies based on performance, psychology, macro market effects, word of mouth etc.
Personally majority of returns is in cap appreciation, dividends are a bonus.
The difference is that in a stock market you buy part of a company which has real value whether its via physical assets or whatever.
A football index future is a bet that a player will win dividends. If a player is unlikely to ever do so then the asset is essentially worthless. People on another thread were discussing how cheap Joe Allen is at 23p but really he is probably worth a couple of pence maybe 10p at an absolute max if viewed as a true financial asset.
It's an interesting dynamic. Capital appreciation is probably the way to go but really what we are doing is buying an asset worth about 20p for 40p and hoping someone will pay even more. Which they are doing so people are making money. Allen is a good example, really 23p is horribly over priced but in reality he is a good buy because its safe to assume people will pay even more.
Comparative value is used a lot. But really its nonsense. If coke increased to 20 quid and Pepsi to 19 quid then Pepsi might be comparatively cheaper but it's obviously very poor value for money.