Why would I give income to McDonald’s (or any of the indexes) when I know damn good they have enough? Do they NEED investors? Cannot these companies enhance upon their own money?
Also, do banks loan income to index companies? Do all large companies have shareholders?
- r you people aware pharmacuedical companies make twice as much profit on dollars they invest than oil compan? (3)
- an economy people invest money into a privite company in hope of making a profit? (1)
- If a company is already making record profits, why would they change their product? (6)
- What values are making people invest so much in high funeral costs? Who profits from this in our society? (1)
- I have noticed there doesn’t seem to be much profit for some people who invest in shares. Am I right in? (3)
- why people won’t f….cooperate!!!if we could get 100 people,100pounds each,we could invest and have a profit? (5)
- where can i invest money besides stockmarket i need a guaranteed and fast profit or something not to risky? (10)
- If I you had 10,000$ to invest in something in the hopes of making a profit, what would you invest it in? (9)
- $500 to invest, with hopes of making a great deal of profit… whats the best way? (6)
- why do say most people who invest long term in stock market make a profit? it’s not like buying a house? (4)
- Why’s Obama a hyopcrite who unrealistically wants to force oil companies to invest profit in renewable energy? (4)
- I want to invest in land and sell quickly to make a profit. Need Advice.? (8)
- Should I invest now in a municipal bond fund? e.g. FLTMX ? How do they pay profit – increase in NAV? (2)
- i want to invest my money in companies that claim thet give at least 8% profit each month can i trust them? (6)
- Is a good way to invest….to find companies with good balance sheets that are making a profit relative to the (1)
- anybody to i can give money so they can invest in stock and give it back with a profit.? (3)
- How much would I need to invest in fairfield resorts and rci to begin seeing profit immediately? (1)
- Where can you find people willing to invest in your business even when it does not make a profit but the town? (3)
- How do private investors make a profit when they invest in the rennovation of a motel? (3)
- which stock companies should I invest in for max profit in the next 5 weeks? (4)
Tagged as: already, Companies, Invest, Making, Need, People, profit, they
{ 4 comments… read them below or add one }
When you buy stocks, you are not lending money to companies, unless it is an Initial Public Offering. Once the IPO has been completed, you buy stocks from other investors and the company (i.e., McDonalds) sees none of that money.
When companies want to raise additional money, they issue bonds, which are basically IOUs. Even larger companies do not always have the necessary cash reserves to carry out all the investments they would like to make. While technically all companies (large and small) have shareholders (at a one-man shop, that one person would hold all the shares, even if they were informal), only certain companies have public shares – these are the companies that trade on the NYSE, AMEX and NASDAQ (as well as the smaller regional exchanges). Other corporations are private and their shares are divided among a limited number of people and are not tradeable.
Companies need investors, in an IPO, so they can expand, operate the business, and pay off previous debts. Investors invest in a company so that they can participate in the profits and price appreciation in the stock.
The shares that you buy on the stock exchange are what’s called the secondary market, you’re not buying it from the company you’re buying it from other investors so it’s not as if the companies are soliciting additional investors. When the companies issue the shares, they solicit investors, that’s the only time there’s actually any investment in the company however as the investors trade those shares amongst themselves, the value of the shares changes and the amount of credit that banks are willing to extend to the company is based on the valuation of the company which changes with the share prices so although a company doesn’t get any additional investment from the changing stock prices, they do benefit from more credit if the shares rises in value.
So all this investment activity that you see on the stock market isn’t going to the companies at all. The companies for the most part do expand on their own money. If they wish to raise additional capital, they can issue more shares but that dilutes the stock. All incorporated companies whether private or public have shareholders and banks do lend money to companies that are part of a stock index.
Except for IPO’s & the rare additional offerings…. you are buying stock from other people or institutions, not McDonald’s (or what ever stock you may be buying).
I don’t even quite get the rest of your question. Your premises are based on totally erroneous assumptions about trading stock. Read some good books on investing and trading…… hopefully you’re not in the market with this misunderstanding of the basics.