They have investors, they have shareholders. Shit like that.

I think it was at 7.50 a share.

And of that share, we have 2 million shares outstanding.

Let's say it sells a million shares.

On the equity side of the equation we just have four million shares.

So this is the investors.

I have these 200,000 shares.

These kinds of things play out in lots of bad ways in humans.

He invested his money in stocks.

No major investor will consider us.

They write these research reports because they want to go to institutional investors or people who have their brokerage accounts with these banks, and essentially sell them stock.

Our liabilities are still 3 billion.

Right?

They're valuing these assets at 1 million.

As investors flee

liabilities plus equity.

And I'm going to earn, or I'm going to grow just because

I'm talking about the situation where you had Pete, and Pete said

In a world without leverage so if I didn't have all this

And I'll show you why that matters in a second.

Big investors.

He invested a lot of money in stocks.

He invested 500,000 yen in stocks.

This is the total actual value.

I use 100 gold pieces.

Just Manic Enough.

He valued what we already had at 5 million dollars.

The big investor bought up the stocks.

What happens in a closed end fund is that all of the investors are essentially

He invested his money in stocks.

because they're both on the right hand side.

By the way before we go forward, this is one point I want to mention.

So you can imagine, this is the actual amount of cash that

He lost a lot of money in the stock investment.

So, remember, assets are equal to liabilites plus shareholder's equity, so if all of a sudden the market value of the equity, the market capitalization, for Ben's shoe company is 215,000... (That is the equity part right over here)

So 5 million of liabilities.

If there are investors willing to finance

And we allow entrepreneurs to share a percentage of their revenues.

This is the building.

So far we looked at open end mutual fund that can kind of grow and shrink depending on how many investors want to invest in that fund and they can grow by creating new shares and selling those shares to general public and they can shrink because someone who wants their money back goes to the fund and said

Let's say in both cases the assets of this company are worth the exact same thing as the assets of that company.

So when you have this regular open end mutual fund, any individual investors can come to the fund and say

He invested two hundred dollars in a growing business.

I put it in, I don't know, maybe I'm a good investor.

If what we had before is worth 5 million and there were a million shares initially, then the pre money valuation