Burying Your Company's Stock

image

You must bury the shares of your public company to reduce its float. The lower your public company's float, the lower your investor relations cost. [See my article The Proper Use of Shares.] The buried shares are deducted from your float and the balance is called the effective float. You want to get the effective float as close to zero as possible. If your effective float is zero, you need not find buyers for your float because there are no shareholders selling their stock in your company. It is obvious that this is the best situation. I suggest that if you want your public company to succeed in all aspects, you may want to structure your company's float like this.

Speculators are not investors

American stock buyers, on the whole, are speculators, not investors. Stocks are bought with the intention of selling them quickly at a profit. Even the U.S. Government realizes that speculation doesn't lead to economic growth. Taxes for stock buyers willing to hold their shares for at least one year are less than for those who speculate in the Market and quickly sell their stock. Tax incentives from the American government have not changed the speculative nature in the U.S. Market because long-term investors continue to lose money. I've always wondered why long-term investors buy and hold stocks in this manner.

Avoiding Having Your Shares In the Market

I have been involved in the North American stock market for over 20 years and can confirm that professionals make more money by selling shares short (betting on the fall of the share price or the bankruptcy of the company) than by purchasing shares. The textbooks only list one of over two dozen of ways that professionals use to sell short stocks. I have written an article on shorting shares that includes 24 ways. It is the only way to effectively defend against short selling. Make sure that how to buy dewa shares your company shares are not in possession of the Depository Trust Company in New York.

When most people buy shares, they leave them "in street name" rather than taking possession of the share certificates. "In street name" simply means they are all turned over to the DTC for safekeeping. Short sellers "borrow" or otherwise rely on the existence of street stock to sell nonexistent shares into the company's market. Public short sellers anticipate paying back the "borrowed shares" at a much lower price when the stock crashes. Professional short sellers do not expect to be able to legally buy back the shares that aren't there and avoid paying U.S. tax on their profits. If the shares are not there to be borrowed, your company can't be sold short.

Cash Market is a term used to describe a company that can keep its shares out of the DTC by requiring physical delivery from all shareholders. Few companies are aware of the dangers that short sellers pose. Brokerage firms and DTC try to make it as difficult as possible to create Cash Markets in any stock.