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Comment by hotpotamus | Hacker News Reader

I believe shares exist to raise capital to exploit a natural resource in this case. But if I already have a profitable mine, I doubt I'd have much incentive to invite others to share ownership of that mine. However, if I have a hole in the ground that doesn't produce anything of value, then it's in my interest to sell shares of it since that might be my only income.

Just a thought really - in spite of hearing many good Twain quotes in my life, this was a new one to me, so I'm kind of working through it.

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> if I already have a profitable mine, I doubt I'd have much incentive to invite others to share ownership of that mine

"Profit" isn't binary, it's an amount of capital that may or may not be enough to invest in things that are likely to increase your profits even more. If you need extra capital to increase your profits, would you as the owner rather wait 20 years and pay for the investments yourself, or share the profits right now and take less risk?

Shares aren't a scam, it's just a pitch for investing. It's a risk/reward presentation that investors can choose to buy if they want. When companies issue shares they're saying "we could use some more money, have a look at our business and if it makes sense, buy some". There's nothing remotely dubious about it, and there are many legitimate situations where a company requires more capital despite being profitable.

Selling shares hedges your risk. Investors are also trying to hedge theirs. That's all it is, a tool to hedge risks. When it's not based in reality it's speculation a.k.a. gambling.

Few mines start and go to full production without outside venture cash = you sell shares, lose part of the control, but use their money to ramp up production. It depends on what you want to do. Bootstrapping from a zero start needs after tax $$. As you start digging you start to sell metals and also pay your taxes, so the ramp up is slowed by the taxes. You can sell $10,000,000 in shares, so now have $10 million and the investor has some paper shares. No taxes are due yet, but you can build a $10 million mine and be in production and make $10 million annually for 60 years, It might cost $3 million for all costs = $7 million profit x 28% taxes ~~= $2 million in taxes and $5 million to divvy up with the shareholders, each and every year for 60 years = you choose. There are venture capitalists for mining IPO's as well as Wall Street IPO's. You pick what you know best.

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