The downside of offering new shares for sale is that doing so dilutes the value of existing shares. Imagine, for example, a company with 100 shares of stock outstanding. If you own 10 of them, you own 10% of the company. If it issues 20 more shares, though, your 10 shares will only be 1/12th of the company, or 8.3%.
Q: What are the best books about Warren Buffett? – P.L., Wilkes Barre, Pa.
A: Try Roger Lowenstein s Buffett: The Making of an American Capitalist (Random House, $20) for a great review of his personal and business history, along with his investment thinking. You can learn a lot through Buffett s own words via Carol J. Loomis Tap Dancing to Work: Warren Buffett on Practically Everything, 1966-2013 (Portfolio, $18) and Lawrence A. Cunningham s The Essays of Warren Buffett: Lessons for Corporate America (Carolina Academic Press, $35).
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