Another question - how does the exchange make money if the rules seemingly discourage trading?
Even incumbent Exchanges make money a lot of other ways today
The Long-Term Stock Exchange Comes to Life
71–80 of 191 posts
Re: The Long-Term Stock Exchange Comes to Life
#72Why not just add friction to selling stocks soon after purchase, perhaps a fee % that shrinks for X years. I feel that be simpler to implement and would lead to a healthier market long-term.
The weighted votes method seems like it would have a more negative effect on liquidity and would disproportionately reward large institutional investors that can afford to stick around regardless of the financial outlook of the company, just to hedge their bets.
Another problem I see is that weighted voting would make older shares more valuable. By purchasing old shares you reduce the number of votes it would take to do anything. This is sort of similar to having a continuous rather than discreet set of share classes. What's interesting about this is that the vast majority of non-institutional investors never vote on anything. This means that, depending on the weighting function, individuals would actually be incentivized to sell their old stock and buy young stock. This would result in consolidation of more voting power in the hands of institutional investors and founders.
The biggest benefit I see of the weighted voting method against other alternatives is a bitcoin-like FOMO buy-in in the beginning.
Re: The Long-Term Stock Exchange Comes to Life
#73Why not just add friction to selling stocks soon after purchase, perhaps a fee % that shrinks for X years. I feel that be simpler to implement and would lead to a healthier market long-term. The weighted votes method seems like it would have a more negative effect on liquidity and would disproportionately reward large institutional investors that can afford to stick around regardless of the financial outlook of the c…
Isn’t that the same as how the capital gains tax currently works? The rate of tax you pay on a winning stock goes down over time until you hit the long term rate at a year.
Re: The Long-Term Stock Exchange Comes to Life
#74Why not just add friction to selling stocks soon after purchase, perhaps a fee % that shrinks for X years. I feel that be simpler to implement and would lead to a healthier market long-term. The weighted votes method seems like it would have a more negative effect on liquidity and would disproportionately reward large institutional investors that can afford to stick around regardless of the financial outlook of the c…
Isn’t that the same as how the capital gains tax currently works? The rate of tax you pay on a winning stock goes down over time until you hit the long term rate at a year.
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Re: The Long-Term Stock Exchange Comes to Life
#75Why not just add friction to selling stocks soon after purchase, perhaps a fee % that shrinks for X years. I feel that be simpler to implement and would lead to a healthier market long-term. The weighted votes method seems like it would have a more negative effect on liquidity and would disproportionately reward large institutional investors that can afford to stick around regardless of the financial outlook of the c…
Isn’t that the same as how the capital gains tax currently works? The rate of tax you pay on a winning stock goes down over time until you hit the long term rate at a year.
No, there's just a single discontinuous tax discount at 1 year.
Re: The Long-Term Stock Exchange Comes to Life
#76Why not just add friction to selling stocks soon after purchase, perhaps a fee % that shrinks for X years. I feel that be simpler to implement and would lead to a healthier market long-term. The weighted votes method seems like it would have a more negative effect on liquidity and would disproportionately reward large institutional investors that can afford to stick around regardless of the financial outlook of the c…
Isn’t that the same as how the capital gains tax currently works? The rate of tax you pay on a winning stock goes down over time until you hit the long term rate at a year.
I am pretty sure this is a per-country setting too. I know the US has the one you referred to but other countries might have different taxation laws.
Re: The Long-Term Stock Exchange Comes to Life
#77Hey everyone, Eric Ries here. I’m the founder and CEO of the LTSE (and also the Lean Startup guy). Happy to see the discussion here and will try and answer a few questions. Unfortunately, a lot of the details of how the LTSE works are subject to regulatory approval, so I can’t share too much while we are working out the details with them. Still, I’ll do my best to answer. Thanks for the comments and happy new year
Most of the value of the US equity market is held indirectly - through ETFs, mutual funds, pension funds, etc. This suggests that direct ownership is not particularly valued among the vast majority of investors. Have you calculated the size of the market for direct investors who value voting rights? And their patterns of trading?
Re: The Long-Term Stock Exchange Comes to Life
#78Earlier quoted context omitted.
I don’t see how that could work generally . Sure, it might be possible to enforce by-laws when making a sale/purchase (but extra obligations would inevitably drive down the sale price), but what of situations in which collateral shares are foreclosed upon, they are inherited, or other non-voluntary transfers of ownership? What if one day they ended up even temporarily in the hands of a government (for example, the It…
> for example, the Italian government’s property and assets cannot by law by encumbered in such a manner Well, depending on the country the LTSE is based in, and whether that law is honored through some trade agreement signed into law in that country, I imagine what the Italian government thinks about the issue is moot. > what of situations in which collateral shares are foreclosed upon, they are inherited, or other…
I’m going to harp on the Italian case (not because I am Italian and think it is the centre of the world, but because it illustrates just how broad one’s rules need to be to be dependable).
I am an Italian citizen. Say I own shares on the LTSE. Say I also owe the Italian government some back taxes, and that the government moves to expropriate my assets to cover my liability. My LTSE shares are now the property of the Italian government and have been shorn of whatever by-laws they might have had attached. The government then proceeds to auction off the components of my esistiate to the highest bidder, who purchases the shares without any obligation regarding his duties and structure.
This is why in general (in the mathematical sense, meaning ”in all cases”) the scheme you posit is not iron-clad. Probably it will work in most circumstances but that’s a lesser level of certainty that offers no guarantees whatsoever.
Re: The Long-Term Stock Exchange Comes to Life
#79Re: The Long-Term Stock Exchange Comes to Life
#80Hey everyone, Eric Ries here. I’m the founder and CEO of the LTSE (and also the Lean Startup guy). Happy to see the discussion here and will try and answer a few questions. Unfortunately, a lot of the details of how the LTSE works are subject to regulatory approval, so I can’t share too much while we are working out the details with them. Still, I’ll do my best to answer. Thanks for the comments and happy new year
Is LTSE designed to allow companies go public more quickly/earlier stage, so that retail investors can invest at A/B-round valuations?