How do companies create wealth for shareholders? July 24, 2026

**SPEAKER_1** (0:02)
A LISTNER PRODUCTION Shares, Markets, The S&P, The ISX, Stocks. This is Motley Fool Money.

**Scott Phillips** (0:10)
Welcome to Motley Fool Money, the podcast. It loves creating value. In fact, I'm pretty sure the ROI on your podcast listening time has just gone exponential. Not because I'm here, I'm Scott Phillips from the Motley Fool, but because he is here, the man who can create something from nothing, who going from zero to one is just like waking up in the morning. Such is the size, the heft, the impressive momentum and the world-changing possibility of Australia's premier online investment club known, of course, as strawman.com and he is known as Andrew Ram Page. Ram, g'day.

**SPEAKER_3** (0:41)
G'day, mate.

**Andrew Ram Page** (0:41)
Yeah, waking up is probably actually, I hear you say that is probably the best example of zero to one I've ever heard.

**SPEAKER_3** (0:48)
Actually, now that I think of it, I was like, yeah, because the alternative is zero to zero, right?

**Scott Phillips** (0:55)
And once you're at once, you can't wake up again. Yeah, right.

**Andrew Ram Page** (0:57)
You know, yeah, I'm good, mate.

**SPEAKER_3** (1:00)
I'm good.

**Andrew Ram Page** (1:01)
I'm clean. You suggested this topic and I just, I jumped at it. I thought, what a great idea. It's one of like all of the best finance, economics, investing slash sort of topics. It's like the simple ones are the best. And I, people can't, I just realized that this is audio.

**SPEAKER_3** (1:18)
People can't see me doing air quotes, but simple are the best questions.

**Scott Phillips** (1:24)
Podcasting, you get to do it eventually. You'll work it out, you'll work it out.

**Andrew Ram Page** (1:27)
But it's true in, I don't care if you're talking about physics or finance or whatever, it's like these really deceptively simple questions. And you say to me, let's talk about what creating shareholder value is like, well, share price go up, bro?

**Scott Phillips** (1:42)
Like, does that ring a bell?

**SPEAKER_3** (1:43)
Like, yeah, let's unpack that.

**Andrew Ram Page** (1:46)
And then, and so, and so began a four-hour deep dive conversation.

**SPEAKER_3** (1:51)
Buckle in, people. One of 200 of what is value.

**Scott Phillips** (1:55)
So you mentioned that it's the great question. I agree with you. The other thing I like about this question, it's a how question.

**SPEAKER_3** (2:01)
Yeah.

**Scott Phillips** (2:02)
And how questions are so much better because it invites you to kind of really kind of, I would say get into the weeds. It's not gonna be boring, don't it? It's not gonna be like boring, nerdy, and counting weeds. It's just getting into the nuts and bolts, right? You kind of, how does this thing go together? Why is it easy?

**SPEAKER_3** (2:14)
Right, right.

**Andrew Ram Page** (2:15)
Yeah, I like being more comfortable.

**SPEAKER_3** (2:16)
Yeah, okay, cool. Okay.

**Andrew Ram Page** (2:18)
Thanks, Joe.

**Scott Phillips** (2:18)
That's how.
So this is how companies create shareholder wealth. And when we talked about it, you first said, well, they make more profits. What do you want from me here? This is going to be the world's shortest podcast. And you're right. But the angle here is not so much how they make money for the entity of the company, the business, right? They put $10 into the cost, they get $20 back, that's how they make money, right? It's obvious. But how does that turn into shareholder wealth in particular? In other words, how do we benefit from that? Now, long, ultra long term, no, not long term actually, short term, the share price is the answer. And just to duck into a little bit of algebra for a second, we know that a share price should be the discounted value of all of its future cash flows.
In other words, even the share price going up is what we kind of want to happen. That's only going to happen if and when either the company's doing those things or other people think it's more likely to do those things to a larger degree. In other words, if you're going to be more profitable in 10 years time, you're going to pay more for all these shares. If I think it'll be less profitable in 10 years time, I'm going to pay less for them. So there is a share price component to this, but even then the reality is that share price reflects intrinsic value of the business based on its future cash flows into the company and occasionally what it does with that money. And this is where we get to the shareholder wealth bit because what it does with its money, how it invests that money, how investors think it's going to invest that money in future, drive the share price, which is exactly to your point, Ram. And that's kind of the starting point we wanted to talk about is we're not going to go into how companies make money. We've done that before. I'll probably overdo something like that in future again, Ram, but this is how-