> If the owners wanted to own money sitting in a bank account, they could put the money in a bank account themselves.
This logic is completely absurd. The assumption of a shareholder trusting a company to hold cash "in a bank account" is that there's value in the ability for the company to deploy it rapidly in the event that they need it. If the shareholders held it in their collective bank accounts, then in the event that the company had an opportunity requiring a big chunk of cash, they'd have to go through some complicated (and perhaps too slow) steps to acquire it.
I have a brokerage account and a checking account, and an ATM card for the latter alone: and yet I keep a reasonable sum of money in the brokerage account so that I can execute a trade with short notice (i.e. without first waiting for a cash transfer from my checking acct). By your logic, "If I wanted to hold cash in the bank, I would hold it in a bank".
I dont think that is what he meant. I think he meant that investing in a company who's value is 30% stock is like investing 70% into an company, and 30% into a low interest savings account.
That said, I don't agree. A company having cash reserves has value beyond money sitting in a personal savings account.
This logic is completely absurd. The assumption of a shareholder trusting a company to hold cash "in a bank account" is that there's value in the ability for the company to deploy it rapidly in the event that they need it. If the shareholders held it in their collective bank accounts, then in the event that the company had an opportunity requiring a big chunk of cash, they'd have to go through some complicated (and perhaps too slow) steps to acquire it.
I have a brokerage account and a checking account, and an ATM card for the latter alone: and yet I keep a reasonable sum of money in the brokerage account so that I can execute a trade with short notice (i.e. without first waiting for a cash transfer from my checking acct). By your logic, "If I wanted to hold cash in the bank, I would hold it in a bank".