Why is there any demand on a stock market?

As I understand it, the value of a stock investment is based entirely on potential resale price. What I don't understand is why anyone's willing to buy an investment that only has value because of the assumption that someone else, sometime down the line, is willing to pay more for it. Dividend payouts are typically just a fraction of the stock's price at any point in time, so it'll take decades to break even at that rate, and if the company shuts down and its assets get liquidated, it seems unlikely that the share of cash distributed to each stock share is going to equal the difference between the share's purchase price and the dividends since the stock was purchased. So, why does a stock market work - why does anyone want stock, let alone bad enough to enable someone else to profit on it?

Regarding earnings, what's the link between earnings and value? "Company earnings not paid out as cash dividends are invested back into the business for growth. Retained earnings reinvested for growth enable future earnings to grow." What good does that do a shareholder, and why, if that's the case, does any stock sell based on non-dividend earnings?

It is similar to why you think that piece of paper in your wallet will buy you $1 worth of items or your belief that the statement you get from your bank saying you have $1,000 in their bank means that you will be able to get $1,000 in paper when you stop by the bank.

to answer your question, I can ask you one.
Why do you accept paper money?? in reality is is just as valuable and usefull as a blank peice of paper the same size.
the reason it has value, is (so Far) it is accepted as the medium of exchange in a country.

Stocks are similar, they are actual shares of a company, and the owner of the shares are able to vote in company elections, are ultimately in line for their portion of copmpany value, and along the way , their portion of dividends paid, and the anticipation of future profitibility makes others bid up the share price.

There is value in shares, not so the dollar...the dollar is a dollar because the government says so, and for no other reason.

Good question.

In the end, a company could get bought by another company, and this is usually at a premium of at least 20% I'd say.

Also other investors, usually larger investors like Carl Ichan and such, take big stakes in a company in hopes to change the way it does business. They can nominate people for Board of Directors, or just push for internal change within the company in hopes of increasing shareholder value.

I think most people who buy stocks in hoping that they appreciate in value are counting on earnings growth from that company to help raise the share value. They can look at what one company sells for based on earnings and their growth rate and compare it to a similar company, and try to find the better value between the two which would be more likely for a takeover offer or future dividend payouts.

Other investors invest in dividend paying stocks (think MO, PG) just to earn the income and have some upside potential from price appreciation, which you don't get from bonds.

You know what happens when you assume. The value of a stock, or most any asset, is the net present value of future cash flows. Dividends are just excess cash that the company cant invest at their cost of capital so they give it to shareholders who can invest it at higher rates. The rest is invested at a rate of return that adds value to the company, future cash flows. Its the rate of return on those cash flows, relative to the price of the stock now, that determines the value of the company.

The value of an investment in stock is based on receiving cash dividends and/or capital gains.

Not all stocks pay cash dividends. But company earnings not paid out as cash dividends are invested back into the business for growth. Retained earnings reinvested for growth enable future earnings to grow.

Earnings growth causes the stock price to increase, resulting in capital gains for stockholders.

So most stocks produce cash dividends and/or capital gains. It is this prospect of receiving future cash dividends and/or capital gains that makes people want to buy stocks. Over long periods, stocks have provided greater returns to investors than U.S. Treasury securities, corporate bonds, municipal bonds, money market funds, and savings accounts.

Good question albeit naive.
Here's another one for ya: Why would anyone spend thousands of dollars on tiny compressed carbon bits that sparkle (diamonds)?