GREY:SGLRF - Post by User
Post by
qwqwon Jul 14, 2013 8:23am
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Post# 21606370
Private vs Public
Private vs Public
Private vs public, Let's say you got a $1 mil burning a hole in your pocket
and there's a bakery for sale for a $1 mil making $100,000 a year in profit.
You decide to buy it because you always wanted to be the boss of something.
There's another similar bakery business where parts of it are always for sale
aka a public one. This one has a MC of $1 mil no debt and again earns $100,000.
Joe stumbles onto this one and likes The p/e of 10 but expects the stock market
to drop in the near future so he waits.A month later the market has collapsed and
the bakery's MC is down to $500,000. Joe pulls the trigger and buys 10% for $50,000.
6 months go by and now the market is in a frenzy.Joe's 10% is now worth $150,000.
He decides to sell and pockets $100,000 in profits ( lucky son of a gun ).
Investing in public companies has serious advantages over private such as a lot less
money required to purchase,you can buy and sell it a lot easier,no need to worry about
day to day affairs,you won't get sued,no need to cover bad debts out of pocket, and the best one of all its price fluctuates a lot thereby giving you the opportunity to buy cheap and sell dear.Something not easily done with a private company.If you had your heart set at being the boss private is the better option.