Stocks are ultimately worth a function of 4 things:

1) The value of their future dividends,

2) The value of their future stock buybacks,

3) The value of remaining book assets at company liquidation/bankruptcy,

or 4) the value per share everyone will receive if the company is bought out.

People can invest for non-monetary reasons: for example wanting to invest in Tesla because they just want electric cars to be a thing or investing in Google because they just love certain aspects of the company. However, at late-stage investing, investments are based on fiduciary incentives from these 4 returns of capital. Absent those 4 methods of returning capital, stock investing is a pyramid scheme.

Amazon shareholders can eventually collude together to vote for more returns of capital if they ever stop believing in Jeff Bezos’s above average performance in returning increasingly higher amounts of free cash flow. This is about as likely as it is for Buffet’s BRK.A/BRK.B (highly unlikely due to his high profile but not impossible if everything were to go south).

A buyout of Alphabet is unlikely at this point because only 3 companies have a higher market cap now. Tech companies don’t have much book value to liquidate. They can potentially choose to not to ever give a dividend and they can keep doing share buybacks in joke quantities —- and pension funds can’t potentially vote to change that.

This is my theory for these stock performance discrepancies and I’d be happy to hear others thoughts on this.