There are several questions on Stack Exchange as to what difference the stock price makes to a company after its IPO. Surely, management cares, it is important to be credible to trading partners, etc.
However, with passive investment being about 50%(?) of the stock market and at the same time the stock price not having a direct influence on the balance sheet, external shocks like the coronavirus won't be blamed on management. To some extent the stock price is just determined by people talking up (sellers) or down (buyers) the stock price. Perhaps short sellers talking it down and long holders talking it up.
How do I make a quantitative indicator that describes the disconnect between the market capitalisation and the book value? What options are there?
Sub 1: When it is said there is an asset price bubble, it usually means stock prices (or RE). Are the assets that actually are on companies' balance sheets also inflated?
I thought it interesting to be an investor: to invest in companies that have worthwhile plans. In reality however, I seem to be buying stock (secondary market) from previous stockholders (primary market). The problem is that the primary market largely ceases to exist after the IPO. You might say that stock buybacks and re-emissions are primary market operations, so I guess my question is focused on the difference between those two.
Sub 2: Why are secondary market participants called investors?
Sub 3: Would it be possible to keep the primary market alive by changing the law?