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Secondary shops flooded with unicorn sellers

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Re: Secondary shops flooded with unicorn sellers

#111

Post by sk5t »

nostrademons wrote: post #103
clock_tower wrote: post #101

Earlier quoted context omitted.

Shorting is very risky, since the downside risk is unlimited if you guess wrong. (Imagine shorting Microsoft based on the low quality of their code, sometime around MS-DOS 1.0.) It's better to buy businesses that will go up when the market goes down, or ones that are recession-proof in general, while avoiding cyclically sensitive businesses and, especially, any sectors that are about to have bubbles burst in them. If…

Options, then. Buy a put option and your downside is limited to the cost of the option; you just get nothing if it's out of the money. My point is that there are plenty of financial instruments that exist precisely so you can "put your money where your mouth is".

Options vs. shorting are just two different ways to risk all your capital on a bet... the "unlimited" downside of a short position has a practical limit--it's when your broker forces your account to cover with buys (the short squeeze) and you zero out.

Re: Secondary shops flooded with unicorn sellers

#112

Post by jrockway »

beatpanda wrote: post #107
superuser2 wrote: post #97

Earlier quoted context omitted.

>"Silicon Valley" is a spectacular, world historical squandering of brain power and it needs to stop. Are you implying that there are less-frivolous actors offering competitive salaries and getting ignored, or that SV is inflating the price of programming labor? Because if the latter, and you're hoping for a correction of programming salaries down to lower-middle-class clerical work that humanitarians can afford, won…

I can say this much -- I have exactly one friend who also works as a software engineer. The rest of my friends are activists, students, service industry workers and non-tech entrepreneurs who are getting absolutely crushed by the cost of living in the Bay Area. A massive, "catastrophic" crash in the tech industry would, on balance, be great for all of them.

> who are getting absolutely crushed by the cost of living in the Bay Area

Outside the bubble, New York has always been like this, and it's not because of the tech industry.

Like the Bay Area, New York appeals to a lot of people, and with the appeal comes competition for housing. The Bay Area is a desirable place to live -- the weather is always excellent, there's plenty of stuff to do (try finding a mountain to ride your bike up in New York City), etc. People pay it because they like it. I don't think it's because tech is there.

Re: Secondary shops flooded with unicorn sellers

#114

Post by frozenport »

danjayh wrote: post #23

I think that this is just the beginning. In my opinion, we're heading for a tech bust that's going to spread to the rest of the economy, and deflate additional bubbles (housing, for one). The government has been pushing cheap money for the better part of a decade in the name of creating the appearance of a 'recovery', but what they've really done is build a new house of cards. Make no mistake: the 'free' money that's…

Who are you to tell me that I can't have free money?

Re: Secondary shops flooded with unicorn sellers

#115

Post by prostoalex »

jonknee wrote: post #98
nerfhammer wrote: post #89

Earlier quoted context omitted.

In the 2008 crisis home prices dropped by like 10-15%. The housing market didn't collapse. It's not as if the "bubble burst" and housing was worthless after that.

That very much depends on where you live. It wasn't that bad in the Bay Area because there wasn't a building boom, but in places that there was a boom the prices climbed very quickly and indeed collapsed even more quickly. Las Vegas, Phoenix, Miami and other markets were all hit very hard (60% or so).

Housing markets are kinda weird in a way - when hearing bad news about the economy, people don't immediately get on the phone with a real estate broker and yell to "Sell! Sell! Sell!"

For primary residences most are driven by loss aversion ("I'll sell it when it comes back to the price I paid for it, I don't want to lock in my losses, and this is still a decent place to live").

You're right that some markets experienced steeper declines than others, and the ones that descended quicker were highly leveraged through 0% down, or interest-only (or both) loans. Post-2008 lending scene has been much more restrictive, I can't imagine a lot of people being highly leveraged at the moment.

Re: Secondary shops flooded with unicorn sellers

#116

Post by throw2192015 »

pjlegato wrote: post #104
dhj wrote: post #8

Earlier quoted context omitted.

If the company is private then employees exercising options generally (always?) have clauses that restrict them from selling that stock whether they are accredited investors or not. Not a lawyer, but I think there may be two reasons: 1) prevent covert takeover from the original founders 2) prevent a general market for private companies (before IPO). IPO involves a lot of regulatory overhead to confirm full disclosure…

More typically, the company has the "right of first refusal" -- when a stockholder has an outside offer, they are first required to let the company buy their stock back at the price that the outsider is offering before selling to an outsider. This is both to maintain control and to avoid having more than 500 shareholders, which triggers all kinds of additional regulations.

> This is both to maintain control and to avoid having more than 500 shareholders, which triggers all kinds of additional regulations.

I _think_ the JOBS Act of 2012 increased this to 2000 instead of 500.

Re: Secondary shops flooded with unicorn sellers

#117

Post by prostoalex »

tayo42 wrote: post #110
JavaScriptrr wrote: post #9

The last couple of years, everytime someone would ask the cliché 'is there a bubble?' Question to a VC, they all waved it away. The questions were legit because of the insane valuations that have been thrown around. How often in History have companies like MagicLeap for example, got to billion+ valuation before ever launching a product. Evernote is a legit business, yes but same story. Blown up by investors. The bubb…

I don't understand why magic leap has so much investment with nothing to show. Just in general I don't see how it could be worth that much. It's cool in a nerd way but doesn't seem to have real value. Like how is this going to make a meaningful impact on the world?

with nothing to show to the public

I am assuming investors are blown away by something before writing those checks.

Re: Secondary shops flooded with unicorn sellers

#118

Post by jessaustin »

sk5t wrote: post #111
nostrademons wrote: post #103

Earlier quoted context omitted.

Options, then. Buy a put option and your downside is limited to the cost of the option; you just get nothing if it's out of the money. My point is that there are plenty of financial instruments that exist precisely so you can "put your money where your mouth is".

Options vs. shorting are just two different ways to risk all your capital on a bet... the "unlimited" downside of a short position has a practical limit--it's when your broker forces your account to cover with buys (the short squeeze) and you zero out.

Buying an option only risks the cost of the option.

Re: Secondary shops flooded with unicorn sellers

#119

Post by prostoalex »

mmanfrin wrote: post #2

Semi related question: One has to be an accredited (i.e. wealthy) investor to invest in startups, but this does not apply to employees exercising options. Does that mean that employees who do not meet the wealth requirements to be accredited are only ever able to sell ownership, and only to accredited investors?

That is correct, the reason for such regulation is depicted in the movie "Wolf of Wall Street", where Florida grandmas are being pitched some "incredible opportunities".

If you're a seller and you did not verify investor accreditation, you're opening yourself up to a lawsuit when things go bad with the investment - what if the buyer comes back and claims he was defrauded and duped into buying shaky securities?

The broker participating in such transaction, in theory, has a chance of having their license revoked due to participation in alleged fraud.

Re: Secondary shops flooded with unicorn sellers

#120

Post by tim333 »

tayo42 wrote: post #110
JavaScriptrr wrote: post #9

The last couple of years, everytime someone would ask the cliché 'is there a bubble?' Question to a VC, they all waved it away. The questions were legit because of the insane valuations that have been thrown around. How often in History have companies like MagicLeap for example, got to billion+ valuation before ever launching a product. Evernote is a legit business, yes but same story. Blown up by investors. The bubb…

I don't understand why magic leap has so much investment with nothing to show. Just in general I don't see how it could be worth that much. It's cool in a nerd way but doesn't seem to have real value. Like how is this going to make a meaningful impact on the world?

Their product comes out in 11 days. I guess the bull case is people buy the thing. They are being secretive but here's Scoble and others being upbeat in their promo vid https://youtu.be/XxwrXacMe6Y?t=25s
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