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stock market vs. baseball card trading analogy
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baseball cards don't pay dividends. but many profitable companies do just that, and those that don't could, some day. profits & dividends is where your analogy falls apart.  but let's take it further.  consider: if baseball cards could somehow yield a regular stream of income just for owning them, then there might be yet another group of people, call them the daves.  these daves i know are the kind of people that would like to own baseball cards over the long term just for their income-producing capability.  daves would seek out the cards with the best chance of producing and growing a reliable income stream.  they wouldn't necessarily care about being able to flip a card at an inflated price to a bob, but they might take advantage of inflated prices once in a while. heck, even some of the steves would enjoy this income while they waited for the eventual capital gain made by selling to a bob at a higher price.  plus, the steves could also sell their cards to daves, not just bobs.  daves would be willing to pay more for a card based on its income stream: how reliable it is, how high it is, how fast it grows, and where it is relative to market interest rates.  a card with a good income stream might even have more value to a dave than to a bob, because a dave doesn't care as much about the popularity of the player. addendum regarding your comment: i suppose i'm still struggling with the best way to present my   question. i understand that companies differ in this aspect in that   they produce value. but if stockholders cannot simply claim a   percentage of a company's value equal to their share, then the fact   that companies produce value seems irrelevant to the "bobs". you're right – stockholders can't simply claim their percentage of a company's assets. rather, shareholders vote in a board of directors.  the board of directors can decide whether or not to issue dividends or buy back shares, each of which puts money back in your pocket.  a board could even decide to dissolve the company and distribute the net assets (after paying debts and dissolution costs) to the shareholders – but this is seldom done because there's often more profit in remaining a going concern. i think perhaps what you are getting hung up on is the idea that a small shareholder can't command the company to give net assets in exchange for shares.  instead, generally speaking, a company runs somewhat like a democracy – but it's each share that gets a vote, not each shareholder. since you can't redeem your shares back to the company on demand, there exists a secondary market – the stock market – where somebody else is willing to take over your investment based on what they perceive the value of your shares to be – and that market value is often different from the underlying "book value" per share.
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