# 🥣 Raw vs Prepared

By [Let Them Eat Cake](https://paragraph.com/@ltecake) · 2022-06-20

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**TL,DR: Common stocks offer less insurance in exchange for voting power**

Common Stock / Raw Fruit

*   standard and basic
    
*   buyer has control over the product
    
*   lacks protections and assurances
    

Preferred Stock / Prepared Fruit

*   luxury item
    
*   packaged and ready for low effort consumption
    
*   includes protections and assurances
    

“Eatamology” “Common” stocks represent the most basic type of shares available and do not contain frills or special circumstances. “Preferred” stocks are named for the perks, including preferential treatment amongst stockholders during a liquidation or bankruptcy.

Financials Common stockholders receive voting rights proportional to the number of shares they own. With these votes, stockholders can influence board member appointments and ultimately the company direction. Sometimes activist investors buy up a substantial number of company shares, 10-50% of all shares outstanding, in order to take over the company and change it’s strategic initiatives. Similar to the liquidation hierarchy, common stock owners are eligible for dividends, but only after the preferred stockholders have already been paid. Preferred stockholders do not receive voting rights - like packaged goods, the supplier and not the buyer retains control of how the product is used. Company’s issuing preferred stock can take advantage of public investment without sacrificing the risk of activist investor takeover. In exchange for the loss in voting rights, preferred stockholders receive first dibs on dividends and other payouts.

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*Originally published on [Let Them Eat Cake](https://paragraph.com/@ltecake/raw-vs-prepared)*