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The problem with equity financing

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  • #16
    Equity investing doesn't make sense for service based companies if the investment calls for revenue share (which it usually does).
    However, it does make sense if you structure it similar to stock purchase where you only pay dividends based on the performance of the company.

    I was big into investing a few years ago until I read the intelligent investor and realized I was investing based on pure speculation and I wouldn't spend the time to dive into financials and analyze management. Nor did I have the expertise in the psychology behind the market in reactions to news or technical investing.

    I currently just reinvest in my business and hold a few stocks recommended by my broker.

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    • #17
      I was big into investing a few years ago until I read the intelligent investor and realized I was investing based on pure speculation and I wouldn't spend the time to dive into financials and analyze management.
      Very fascinating! What about that book got you to rethink your investing and how did you go about choosing who you invested in? Were you investing long term or short term?
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      • #18
        Very fascinating! What about that book got you to rethink your investing and how did you go about choosing who you invested in? Were you investing long term or short term?
        The book "The Intelligent Investor" by Benjamin Graham. The guy that taught Buffet about value investing.

        I was definitely investing in the short term buying up various companies from heavy equipment to banks. I would do a ton of research on each company but I didn't have the financial background to really analyze the balance sheets and income statements properly. Aside from that, I had no clue about the management teams other than what I heard in mainstream news.

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        • #19
          I didn't have the financial background to really analyze the balance sheets and income statements properly. Aside from that, I had no clue about the management teams other than what I heard in mainstream news.
          It's fascinating how it works, where it seems like you just can't know that much about the management. It's almost as if you need to invest in businesses that will survive and thrive regardless of their management because it always seems to be the wild card in the equation.
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