When a business has a P/E multiple of >100+, a significant portion of the investment is speculative rather than a rational projection assets and future earnings.
It's really hard to make a rational value fundamentals argument for why anyone is willing to invest in TSLA, with its current price putting its P/E of 1700.
Also, the long term average P/E ratio is 15. Stocks haven't really had P/Es less than 5 since the Great Depression.
Found this interesting list of average S&P500 P/E over the years https://www.multpl.com/s-p-500-pe-ratio/table/by-year
Average P/E is 15.79, higher than I thought it was.
So you are saying more than 10% yield should be normal? (Assuming normal payout ratio is 50% - highly variable).
You might get a cut of the profits in the form of dividends... unless you don't. Plenty of stocks never pay dividends. A lot of companies pay more to charity than to dividends to investors.
Or, you get a vote on company policy at the stockholder's meeting... But if the founders own more than half the stock, that doesn't actually matter. And that's assuming the founders haven't just sold stock with no voting privileges.
If the company files for Chapter 7 bankruptcy, stock owners are entitled to company assets... And almost never see any, because they're last in line behind every other creditor.
So it's unclear what, precisely, the practical weight of "partial ownership in a real business" has in general. In specific, sure; stock could be access to dividends or a meaningful voice in company policy. For a lot of stock, the only real value is "How much will someone else pay me for this piece of the action?"