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I’ve been thinking that it’s weird that if you think a company has good chances of succeeding and you want to benefit from that, the canonical way to do it is t

I’ve been thinking that it’s weird that if you think a company has good chances of succeeding and you want to benefit from that, the canonical way to do it is to give money to someone outside the company in order to buy their share of the company. Like, wouldn’t I prefer that money to go towards the actual funding of the company’s projects? I’m not aware of any form of “investment” that allows a casual investor (someone who isn’t a millionaire) to actually deploy that capital towards production.

pm90 7y ago
> Like, wouldn’t I prefer that money to go towards the actual funding of the company’s projects? The problem is that this would make the company too responsive to the needs of investors rather than its markets. The corporations power is delegated via its shares but its value is derived from the markets it serves. It’s in the interest of shareholders (who passively invest in it) for the corporation to judge projects based on what the markets think are valuable. Neither the corporation nor the shareholders know exactly what that may be, but the corporation spends more time and effort trying to get a good answer than the shareholders do. So the shareholders leave everything beyond the most drastic decisions (sell, close the company etc) to the corporation.
pintxo 7y ago
You can do this, but only when the company is issuing new shares, which they do sometimes. Otherwise, when buying shares, someone in the distant past did invest into the company by buying shares they issued. You are just taking over their share of the company. Which makes you now the one who provides equity to the company.