Not necessarily. Should the market action bump up a company PE very high (hello, Costco at PE 53 today) that's not a reason to splurge on projects. On the contrary, many shareholders would expect the company to behave responsibly, save cash, pause share buybacks and build up war chest for leaner times, where buying a competitor could be way cheaper. My 2c.

If the PE ratio is high enough, the company can raise money by simply issuing more shares. Giving the company a money-printer is the whole point of the stock market. That's what makes you an investor -- you're offering the company the value of your shares by exposing yourself to "inflation" whenever the company needs to raise some money.

On paper. In reality, issuing shares (or debt) takes time and is a complex process, a mere sign of which can dampen share prices.

> That's what makes you an investor -- you're offering the company the value of your shares by exposing yourself to "inflation" whenever the company needs to raise some money.

I beg to differ. What makes me an investor is buying a share of future company profits, directly via dividends or indirectly via a future sale of shares. Many of the companies I invested in over the last 30 years were (over time) reducing share counts via buybacks, not issuing shares like candy.

You're not an "investor" if you aren't actually funding the company. Trading scrips that entitle you to a share of the profit is not "funding" the company.

Except that you are -- every time that the company prints shares, they've taken some value from you to fund their operations. If companies weren't allowed to issue shares from thin air, there wouldn't be much point to the stock market.

Everything you've said sounds like next quarters problem.