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If the PE ratio is high enough, the company can raise money by simply issuing more shares. Giving the company a money-printer is the whole point of the stock ma
by roncesvalles 2y ago
If the PE ratio is high enough, the company can raise money by simply issuing more shares. Giving the company a money-printer is the whole point of the stock market. That's what makes you an investor -- you're offering the company the value of your shares by exposing yourself to "inflation" whenever the company needs to raise some money.
- ptero 2y agoOn paper. In reality, issuing shares (or debt) takes time and is a complex process, a mere sign of which can dampen share prices. > That's what makes you an investor -- you're offering the company the value of your shares by exposing yourself to "inflation" whenever the company needs to raise some money. I beg to differ. What makes me an investor is buying a share of future company profits, directly via dividends or indirectly via a future sale of shares. Many of the companies I invested in over the last 30 years were (over time) reducing share counts via buybacks, not issuing shares like candy.
- roncesvalles 2y agoYou're not an "investor" if you aren't actually funding the company. Trading scrips that entitle you to a share of the profit is not "funding" the company. Except that you are -- every time that the company prints shares, they've taken some value from you to fund their operations. If companies weren't allowed to issue shares from thin air, there wouldn't be much point to the stock market.