It isn't just risk that explains why you might not be willing to pay more than $1 for a share that you expect to be worth $1.10 in a year's time.
First of all (rather trivially, and I am not suggesting you've overlooked it) there is inflation. That $1.10 next year is denominated in dollars that will be less valuable than today's dollar. (Assuming positive inflation rates, which is the usual situation.)
Second, there is opportunity cost. While your money is invested in the company you bought shares in, it isn't available for you to spend on other things. Hence, even after adjusting for inflation and even if there were no risk involved, if you buy an asset today and sell it in a year, you should expect to be compensated for that inconvenience by getting more for it than you pay. I think this is the main thing you've overlooked. Relevant finance term: "risk-free interest rate".
Third, there is growth. That company you're buying shares in presumably thinks it is actually adding value to the world through its work -- maybe they're inventing new things, or extracting resources from the ground that were previously embedded in deep rocks and no use to anyone, or trading between people with different utility functions so that everyone gains.
The second and third things there aren't additive. Growth is what makes it possible for the share to be worth more next year than this year; opportunity cost is what makes it necessary. If a business isn't able to produce value then no one will want to buy its shares.
So your first and second point make sense to me, they together make the nominal interest rate. What I don't understand is your point about growth. The price of a stock should be determined by the adjusted future returns of the company right? The growth you speak of should be accounted for already in our models of the future returns. So if the price going up that means the models are underestimating future returns right?
The most recent post in December's Stupid Questions article is from the 11th.
I suppose as the article's been pushed further down the list of new articles, it's had less exposure, so here's another one for the rest of December.
Plus I have a few questions, so I'll get it kicked off.
It was said in the last one, and it's good advice, I think:
This thread is for asking any questions that might seem obvious, tangential, silly or what-have-you. Don't be shy, everyone has holes in their knowledge, though the fewer and the smaller we can make them, the better.
Please be respectful of other people's admitting ignorance and don't mock them for it, as they're doing a noble thing.