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Equity is zero-sum. Once you hand it out, it's gone. You can create more, but it will dilute everyone else. Not a very good arrangement for something that shoul
by sgammon 2y ago
Equity is zero-sum. Once you hand it out, it's gone. You can create more, but it will dilute everyone else. Not a very good arrangement for something that should create value over a long period of time.
- eru 2y agoYou know that stock buybacks are a thing? In any case, things are a bit more complicated. If the company manages to sell equity at a premium to current market prices, existing shareholders benefit, they don't get diluted in any absolute sense. Conversely, if the company does stock buybacks at a premium, continuing shareholders suffer.
- sgammon 2y agoYes, a thing predicated on cooperation between humans.