ASX Shares Are non-dividend paying shares (e.g. MUS) a ponzi scheme?

It could be worth more because they use those funds to increase the size of their resource & in turn longevity of the mining operation and future profits/dividends.

When you buy a non-dividend paying stock you are making a calculation/speculation that they will create more value (increase the value of their assets or future cash flow) than the cash they burn through doing so.

 

@datto 13 11 14 is for Lifeline mate, its not worth it

 

That makes lots of sense Guest thanks mate

 

A ponzi scheme is one which pays interest or dividends out of money paid for new investment.

So a non-dividend paying share is not a Ponzi scheme. Many companies, particularly in the early years, retain profits to expand the business. This is not necessarily a bad thing.

The share market prices usually reflect expectations. If a company is expected to do well, its share price usually rises. The rise may be well in excess of actual performance, at which time the price may fall to reflect the actual result.
Marg

 

A simple philosophy,
Do not buy anything you don't understand.

 

@Lemmy a fiver lots of learning still to come for me I am sure

 

I agree. Stay away from penny dreadful mining stocks. Unless you want to end up as one of those callers on "Your Money Your Call" on Sky Business who get burnt on penny mining plays.
They really are little different to casino gambling.

 

Yeah keep away from those penny stocks. Otherwise you'll be wanting to borrow some rope from me, yikes!

 

"It can be a difficult tight-rope to walk"..

But if you study inside out some of the new start-up's that will be listed over the first 3 months -- and don't worry about the uncertainty and as they all lack accountability --some will achieve credibility while others they start down a path with huge fanfare only to change direction then a slow steady downward spiral when they fail to build momentum..

..not advice i only went to grade 10..

 

A company is worth the present value of its future cash inflows.

If you owned and ran a coffee shop, what's the most important thing at the end of the day? How much money you can take home after after paying your staff and bills. Same principle applies for any stock you buy.

I recommend this book - https://www.amazon.com/Outsiders-Unconventional-Radically-Rational-Blueprint/dp/1422162672

 

You need to be thinking about the business first and foremost. If you don’t have a clue what they are doing or why they are doing it don’t buy the company’s stock.

 

If basic questions about listed company valuations are being asked, then stay well away from companies like Mustang(MUS) and Sundance Resources (SDL).
I strongly suggest sticking with the stocks in the ASX50

 

@TreeGrove I think you need to differentiate between companies which make a profit or at least have meaningful income; and those who do not.

Companies who choose not to pay dividends are a different kettle of fish to those who could not and will not be able to for some time.

 

I think this has been mentioned somewhere before and it goes like: whack 10K down on 50 penny stocks, wait 5 years and the chances are you could be rich, very rich.

Worst case scenario, you could be 500K out of pocket lol....what? it's not a bad capital loss to offset against all those IPs you sell for profit.

Not advice, I invest in the Druitt.

 

Come to think of it, Datto and I would have a better chance with the money that you'd splash on penny stocks at the Rooty Hill RSL
Rooty Hill RSL - Live Music, Restaurants & Entertainment in Western Sydney
(I wish they hadn't caved in to political correctness and kept the sign out the front that said Vegas of the West)

 

Buying shares are buying a part of the company so they do have some intrinsic value and there is more to it than just sentiment. If the share price is too low it might be worthwhile for another company to take it over and they usually do this at a premium to mop up all the shares.

 

I am sticking with some basic EFTs whilst I learn the ropes thanks for the warnings everyone

 

Any recommendations for a good book on the stock market and shares? I like to read on the train on the way to work

 

I believe the OP's "ponzi" thinking of holding a non-dividend share is in the risk of being the last to hold the shares when things start going south. Yes, capital growth of a company is great when it's on the up. But unless you sell to solidify the gains, then there's always the risk of losing money. But that's the investment 101 lesson of risk versus reward.