The Secret to a Strong and Sustainable Share Price

Every public company’s share price reflects the temporary balance between supply and demand. The reason for the sale of the company’s stock is secondary to the act of selling. The reason the investor buys the shares is secondary to the act of buying. Investors buy stock because someone has told them to do so. Usually, shareholders and market professionals sell stock to make a profit.

The shareholder’s viewpoint evolves. It’s based upon the performance of the share price. The investor buys your stock expecting it to appreciate. If your share price slowly declines, the shareholder’s attitude goes from a profit motive to a breakeven motive. If the share price continues to decline, the shareholder’s desire becomes one of recovering some of his or her lost risk capital. You can protect the majority of your shareholders from this seller’s psychosis by encouraging them to sell half their shares, when your share price doubles. If they do so, they no longer have a downside risk in holding the balance of their stock in your company.

The secret to a strong and sustainable share price is to LIMIT SELLING. A Company’s shareholders must understand and share your corporate vision. You must give them reasons to hold their shares in your company. Assuming your shareholders have recovered their risk capital, the only sellers of your stock should be shareholders facing a financial emergency. These few shareholders must raise money to meet personal obligations. And so, they sell their shares in your company.

Your company’s insiders should not sell their stock to the public. Insider sales increase your float. A bigger float increases the need for more buying to sustain your share price. Buying costs money. Over several years, the cost of creating that buying will offset the financial benefit of the insider sales. There’s a better way for your insiders to maximize their profit, without adding to your company’s float.

The SEC insider reporting requirements and limits on the sale of insider shares go beyond the educational limits of our website. However, you should read the 144 Rule [http://www.sec.gov/investor/pubs/rule144.htm] Discuss the insider selling issues with any attorney familiar with American Securities Regulations.

Both the public and market professionals can sell short your stock. There are more than twenty-four ways that market professionals can sell NONEXISTENT shares of your company into the Market. Unless you plan to protect yourself against these risks, your float will increase and the costs of finding buyers will become very expensive. An effective poison-pill defense against short sellers costs only a few thousand dollars. The FAILURE to mount a defense can cost you your company.

Initial Public Offers (IPOs) are risky, costly and dangerous. They are risky because over half of the IPOs never raise money. They are costly because the underwriters use several techniques to ensure that they earn 25% to 30% of the money raised for your company. And they are dangerous because they open the door to short selling and the sale of nonexistent stock. There is a better way to raise money for your public company. You’ll find it in Venture Capital Profits.

We’ve discussed the need to create buying under Stock Support. If you limit selling and have a plan based upon the Truth that results in buying, your public company will have a strong and sustainable share price. Do otherwise and your public company will join the majority of companies that trade in the United States and fail between two and ten years after they commence trading.