30/ In addition to this kind of "opportunity cost", we should also consider the impact of inflation and taxes when weighing such "dividend vs retained earnings" trade-offs. But this thread is already too long! So, we'll cover these topics another day. #OrcusFinance
1/
The magic of retained earnings✨🧵
This is the basic theory behind why equities grow exponentially over long periods of time.
As modern investors, we'd do well to understand this theory --- and the assumptions it's based on.
29/ IF we're not aware of any opportunity to earn ~15% on our own, we're better off just letting the business retain our $1 and re-invest it on our behalf. But IF we know of an opportunity that can get us,say, 20%,we'd be better off if the business just gives us the $1 now.