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The Long-Term Stock Exchange Comes to Life

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Re: The Long-Term Stock Exchange Comes to Life

#161

Post by twobyfour »

chii wrote: post #112
toast0 wrote: post #51

Earlier quoted context omitted.

There is a market for this, the OTC or pink sheets. At initial listing and if the company itself or its insiders or affiliates are selling, there are required financial disclosures. I think there's resistance to public trading however because it generally requires more structured accounting (GAAP vs cash accounting), and invites external scrutiny and pressure.

> requires more structured accounting (GAAP vs cash accounting), and invites external scrutiny and pressure. aren't all these good things? Prevents both scamming, as well as ensuring that the founders take a careful look at their business, and that it isn't purely fueled by stock/investment, but is generating profit?

They are in many cases. But they can also be prohibitively time consuming and expensive for a small business - be it your corner bodega or the 5-person startup working out of your neighbors basement.

Re: The Long-Term Stock Exchange Comes to Life

#162

Post by twobyfour »

hendzen wrote: post #79
eries wrote: post #71

Earlier quoted context omitted.

Even incumbent Exchanges make money a lot of other ways today

Trading fees? Market data costs? Colocation fees? All things that suffer if you discourage active trading.

To be successful, it doesn't have to make as much money as the other exchanges. Just enough to continue to operate.

Re: The Long-Term Stock Exchange Comes to Life

#163

Post by cpkpad »

WalterBright wrote: post #135
sytelus wrote: post #126

Earlier quoted context omitted.

This is not popular opinion, it's exactly the truth. There is enormous pressure on CEOs to meet analyst expectations of growth each quater and not meeting them would immediately mean punishment in terms of sell out. This usually translates to continuously cutting costs and eliminating investments on long term bets. Most boards are heavily populated with representatives of investors and fund managers. They make sure t…

> This is not popular opinion, it's exactly the truth. Then which stocks are you sure are doing this, and are you shorting them? > There had been a decade when no one was interested in Amazon stock This is simply not true. AMZN has been a solid performer since its IPO. I should know, I'm a happy AMZN long term investor. > that will result in stock pop so they can cash out That implies they must find a lot of suckers…

> That implies they must find a lot of suckers to sell to. Stock prices are usually driven by analysts who spend their days analyzing companies to predict future performance. Good luck fooling them all.

It actually indicates something a bit different. CEO's optimize for their own compensation with bonuses and similar set by quarterly goals. They optimize for meeting goals over company performance.

Externally, companies work on perception. Analysts have no way of knowing if good R&D is still going on or if sales figures are getting inflated. They operate only on externally-visible information. Hence, CEOs (who expect an average tenure of three years) optimize for externally-visible information on metrics over long-term performance.

They also optimize for graft to the board members (so they can keep their jobs), but that's a whole different story.

The exception seem to be founder-run companies. Founders have an emotional stake, a more significant long-term financial stake, and have not gone through the corrupting process of becoming a CEO. Which of those is dominant? Your guess is as good as mine.

Re: The Long-Term Stock Exchange Comes to Life

#164

Post by erikpukinskis »

pavel_lishin wrote: post #27
erikpukinskis wrote: post #22

Earlier quoted context omitted.

Doesn’t that still achieve the goal? No one is dumping the shares on news cycles.

The shares of holding companies would end up being the ones getting dumped.

How does that affect the held shares?

Re: The Long-Term Stock Exchange Comes to Life

#165

Post by zero_intp »

WalterBright wrote: post #140
rsync wrote: post #94

Earlier quoted context omitted.

"Anecdotes are easy to find on both sides. But ask yourself which is more likely -- that investors are dumb and managers are smart and investors should just trust managers to do the right thing? Or that investors are smart and need to hold managers accountable because it's the investors' own money at stake, while managers are smart too but always want a longer leash to do their own thing regardless of whether it's go…

If that is true, why do S&P500 index values continue to rise, decade after decade?

Hi Walter, this line of questions is not going to lead to a proof of your position. The S&P index removes failures, so your question fails to address survivor bias. Also, you argue the perfect over the good as a reason for status quo.

Re: The Long-Term Stock Exchange Comes to Life

#167

Post by phkahler »

roenxi wrote: post #90
phkahler wrote: post #50

Earlier quoted context omitted.

Your concern is only the tip of the iceberg. Any set of rules will be gamed. The only way I can think of (and it can probably be gamed) that would really put the long term into the executives mind is to have most of their compensation based on the value of the company a few years after they're done. But given the existence of options and shorting stocks and any number of ways to mitigate risk or make money that don't…

> In some cases I think the answer is to strip investors of control. They are the ones allegedly pushing short term profits at the expense of the long term. Hopefully this was a very fleeting thought; when it comes to ideas about changing corporate structure you couldn't really come up with a worse one. It is a complete violation of the skin-in-the-game principle that has so successfully propelled capitalist society…

It was a partly fleeting thought. Most people but into a company because they believe in what it is doing, it the people running it. Most investors do not try to exert control over companies. They buy in based on an opinion about what they're buying.

Re: The Long-Term Stock Exchange Comes to Life

#168

Post by eries »

arekkas wrote: post #150
eries wrote: post #29

Hey 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

How will you add liquidity to LTSE, as (from the little details given) it seems like the market will be moving very sluggish because trading volume is "conceptually" limited.

The LTSE is part of what’s called the National Market System, so our stocks still trade on other exchanges. We don’t limit the ability of traders to access the stock.

Re: The Long-Term Stock Exchange Comes to Life

#169

Post by eries »

derriz wrote: post #146
eries wrote: post #103

Earlier quoted context omitted.

Our rules are not limited to direct owners, as your question assumes. Many institutional investors are fans too

Hi Eric. My question doesn't make that assumption. It questions the size of your target market. You are proposing to "reward" certain investor behaviors but I am suggesting that the numbers indicate that the vast majority place NO value on the reward you are offering. It seems clear to me that the vast majority of people who have an interest in having exposure to the equity markets do NOT value voting rights. If more…

I guess I don’t understand what you want to know.

Re: The Long-Term Stock Exchange Comes to Life

#170

Post by eries »

rampage101 wrote: post #114
eries wrote: post #29

Hey 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

Hi Eric, the idea sounds fascinating. When will it be open for individual investors to make a deposit? Is there a list of companies which will be chosen for initial listing?

Not yet- we have to secure SEC approval before any of that can happen.
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