Hey everyone,
Here's a quick beginner stock investing lesson for today:
I've noticed a common misconception out there of people thinking that when you buy a share of stock you're somehow giving money to the company.
In reality, the way it works is that when you buy shares you're just buying them from someone else that owns them. "Someone else" could be an individual investor like yourself or a pension fund, a company, or another entity etc. that owns them.
The majority of stock buying and selling takes place between owners and would-be owners.
When a company issues new shares it works similar to the IPO process. The new shares are typically sold in an underwritten deal to an investment bank and then distributed through a syndicate of other banks and brokerages. So technically you're still buying them from "someone else" that owns them... That money is already in the company's bank account. And the further trading of those new shares is again happening between owners.
I made this video where I talk about what I've said above and go on to cover what this stock dilution means for you as a shareholder.
I'm brand new here so I tried to give some value in the post and not just drop a youtube link. So hopefully this get's approved and you can benefit from watching it.
Would also love your feedback and suggestions or criticism. Thanks!
Submitted September 02, 2020 at 11:53PM by Richard_Hopkins https://ift.tt/2QR0N7a
