Just got to read a line from a book which says that cost of capital is not about the investor but the investment itself. And then it goes on to talk about how it is about the investment’s perspective of market participants, that is investors. So it’s not about The guy investing, but the other people who are participating in the market. So it is about the product, the financial instrument you got, and the reaction of the market to it, or similar products like it.

So I think it’s all about the raw data that you are obligated to publish, but also the positioning and optics you have. Because if you position yourself well, the investors, in this case, are bound to see you favorably and give you a nice cost of capital. Hope the next sentence makes it less convoluted, but what I get from here is cost of capital is a function of market participants’ anticipated or actual reaction. to a particular financial instrument or product. It can be stock, it can be debt or whatever.

So, the risk-free rate is the toll everyone pays, but if you have good fundamentals and good positioning, your risk premium can be really good. And that in turn lowers your cost. Gives you good net income maybe you can invest it or give it back to your shareholders.

So the perception of market participants with regards to your business determines how much you can give back to your shareholders. And I think it’s not about any random market participant. It’s about what you can reasonably deduce or defend, like. The same stock can have very different market perception when it is primarily dealing with venture capitalists or private investors during its Pre-IPO phase, and those people are easy to impress. But when it comes to the post-IPO public market period, the same positioning and fundamentals don’t really appeal to these. So there is also ICP factor here that whoever is your Investor ICP. You have to position accordingly to have a favorable position. Or you can end up like a lot of startups who are darlings during their pre-IPO phase, but then plummet to hell when it comes to post-IPO. During the pre-IPO Venture capitalist phase, everyone keeps the delusion of growth alive, but a more cynical view of public markets doesn’t let that growth story. Have same effectiveness as before, and once the growth is crushed, or the perception of growth is crushed, you are just any other ordinary company.

So if you are a tech stock, you can’t really expect the standards of metal industry to be applied to you. That is a completely different set of market participants. So There is definitely a ICP thing going on here. And most of the times you don’t get to choose it. You are assigned to it.