Stocks are valued by the market as a combination of three factors which inform price formation:
- Discounted future cash flows
- Public sentiment
Stocks return income-cashflows generated by the enterprise to shareholders via three processes:
- Dividend payments
- Stock buybacks
- Mergers and Acquisitions
- Fama, Eugene F. "Efficient capital markets: A review of theory and empirical work." The journal of Finance 25, no. 2 (1970): 383-417.
- Janeway, William H. Doing capitalism in the innovation economy: Markets, speculation and the state. Cambridge University Press, 2012.
- Lefevre, Edwin. 2004. Reminiscences of a Stock Operator. Vol. 175. John Wiley & Sons.