Why are we making this so complicated?

If I buy stock for $100 with the expectation of selling it later for $200, then that stock has value.

If I buy gold at $500 an ounce with the expectation of selling it later for $600 an ounce, then that gold has value.

If I own property, that property has value.

If I own the patent rights on a useful widget manufacturing process, those rights have value.

In all cases there is risk involved. The stock may sell for only $50, the price of gold may drop, the EPA may find ground contamination in my basement, the Japanese may figure a way of manufacturing widgets faster and cheaper. Risk applies to any asset, tangible or intangible, whether it be a paper certificate, a hunk of rare metal, real estate, or intellectual property.

However, any item that can be expected to return more than its cost of acquisition has value, and this certainly is the expectation when it comes to stocks.

tanstaafl.