This video dives deep into understanding investor incentives, a critical concept for beginner investors. By separating company and shareholder incentives, you can avoid getting taken advantage of through dilution and capital raises.
Key Points:
- Separate Company and Shareholder Incentives: Investors and companies have different goals. Companies prioritize survival, while investors aim for profit.
- Beware of Dilution: When a company issues more shares (capital raise), existing shares become less valuable (dilution). This hurts shareholders.
- Don’t Confuse Company Survival with Shareholder Success: A company surviving through dilution might destroy shareholder value.