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There is nothing wrong with taking a distribution from a company; investors/founders need a payout. while I agree with much of the content, I do disagree with
by manishsharan 10y ago
There is nothing wrong with taking a distribution from a company; investors/founders need a payout.
while I agree with much of the content, I do disagree with this statement: "Companies that keep reinvesting keep adding risk to their companies."
I can't agree with this assertion. Companies that keep reinvesting their profits are doing it to finance future growth. Obviously, future growth implies a degree of risk. But you could argue that by reinvesting profits, you are de-risking the future by building capability to satisfy a demand and the proof of demand is the profit generated.
- adevine 10y agoYou're trading a certainty for an uncertainty. That's pretty much the textbook definition of financial risk.
- kmonsen 10y agoIf you put the money in your own pocket it is yours. If you use it to reinvest in the company it can be lost. Clearly this is risk. You call it reinvesting, and any form of investing comes with risk. I think you are missing the point here, he is not saying it is never smart just that it adds risk which is clearly true.