The Investing for Beginners Podcast - Your Path to Financial Freedom

Back to the Basics: Stock Dilution and the Main Types of Investments Explained Simply

Apr 30, 2026
They break down share dilution and when issuing more stock helps or hurts your ownership. Buybacks get a close look, including when repurchases are smart or just financial theater. Hidden dilution from stock compensation and where to find share counts are explained. The conversation also surveys alternative investments like gold, crypto, funds, bonds, and REITs.
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ADVICE

Avoid Debt Fueled Or Overpriced Buybacks

  • Beware buybacks funded by debt, buybacks instead of growth, or buybacks at extreme valuations.
  • Andrew warns borrowing to repurchase shares or buying back at very high P/E can be short-term cosmetic gains that harm long-term shareholders.
INSIGHT

Stock Compensation Masks Hidden Dilution

  • Stock-based compensation can hide real dilution even when buybacks are reported.
  • Companies may retire shares via buybacks while issuing many options, keeping diluted share count flat or rising despite headline buyback totals.
ADVICE

Track Diluted Shares Outstanding Trend

  • Always check diluted shares outstanding (found on the income statement) rather than basic shares.
  • Andrew recommends tracking diluted shares over time and using tools like Fiscal to see a 10-year trend and CAGR.
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