The conversation between human and AI assistant.
Why do shares trade at enormously larger valuations than their face value? Isn't this sophisticated corporate black money?
I was wondering if you could help me understand why shares trade at such high valuations compared to their face value.
Of course! Generally speaking, the market value of a share reflects the perceived value of the company's assets, brand, patents, intellectual property, management team, and potential for future growth and profits. It's not necessarily black money, but rather a reflection of market demand and confidence in the company's future prospects. Does that make sense?