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Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

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Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#61

Post by s73v3r_ »

mattnewport wrote: post #52
JumpCrisscross wrote: post #12

Earlier quoted context omitted.

I used to be skeptical of accredited investor requirements [1] until cryptocurrencies happened. That an entire space can (a) go from zero to fraud in the blink of an eye and (b) not only ignore the delineation between gambles and core investments, but develop a collective disdain for it and anyone espousing it, has me convinced of the rule's wisdom. Investing in start-ups costs money. Diligence costs money, negotiati…

Another interpretation is that the crypto mania is evidence of huge unmet demand for the types of investment profile that are largely unavailable to non accredited investors. If regular investors had access to more (possibly less risky) such investments perhaps the demand for crypto investments wouldn't have been so great.

I think that just shows that there's a huge unmet demand for get rich quick schemes.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#62

Post by s73v3r_ »

nokcha wrote: post #49
JumpCrisscross wrote: post #12

Earlier quoted context omitted.

I used to be skeptical of accredited investor requirements [1] until cryptocurrencies happened. That an entire space can (a) go from zero to fraud in the blink of an eye and (b) not only ignore the delineation between gambles and core investments, but develop a collective disdain for it and anyone espousing it, has me convinced of the rule's wisdom. Investing in start-ups costs money. Diligence costs money, negotiati…

I think that the rich and the poor should have equal protection of the laws, as a matter of principle. Investor accreditation could be done on the basis of passing an exam (similar to how lawyers need to pass a bar exam in order to practice law) instead of on the basis of net wealth or annual income. >There is no person (a) who doesn't meet the accredited investor requirement and (b) for whom an illiquid, volatile se…

How much would you have invested, and how well would you have done had the start-ups went belly up?

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#63

Post by s73v3r_ »

conanbatt wrote: post #56
notahacker wrote: post #36

Earlier quoted context omitted.

A lottery is marketed as a game in which one spends a small sum of money in the hope of winning a large sum, not as a place to park ones savings in the expectation of increasing their value over time. And still likely offers a less negative ROI than unregulated securities offerings to retail investors.

You are welcome to restrain yourself from your own ignorance, but I don't see why you should have the right to do so on others that don't enjoy that bondage. Punish those you disagree with by letting them hang by their own rope, or realize later on that it is you today who is being hang by your own.

So what happens when irresponsible investors plunge the country back into another great depression? How are you going to prevent the mistakes of others from causing a financial collapse which causes me to get laid off, through no fault of my own?

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#64

Post by mattnewport »

crdoconnor wrote: post #60
mattnewport wrote: post #52

Earlier quoted context omitted.

Another interpretation is that the crypto mania is evidence of huge unmet demand for the types of investment profile that are largely unavailable to non accredited investors. If regular investors had access to more (possibly less risky) such investments perhaps the demand for crypto investments wouldn't have been so great.

>If regular investors had access to more (possibly less risky) such investment Which could be done easily by raising interest rates above 0% and offsetting any resulting collapse in demand with counter cyclical fiscal policy.

Years of extremely low interest rates does seem like a contributing factor to the demand for riskier investments that may see some inflation beating return.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#65

Post by jimrandomh »

dlp211 wrote: post #45
leojg wrote: post #20

Earlier quoted context omitted.

Public companies tend to focus on making money instead of innovation? They become slaves of their quarter reports and lose the ability of investing in long term projects? Maybe a bit exaggerated? :D

I think shareholder expectations determine what a company does. If the company is a growth company, shareholders will gladly allow the company to innovate, but if it's a blue chip, they will expect dividends.

Right, but there are important, large companies that are neither of these things. A privately-held company can act as a pseudo-nonprofit, if its management wants, investing in the benefit of humanity at the expense of both profit and growth. The possibility of shareholder lawsuits makes that much harder to do.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#66

Post by lr4444lr »

JumpCrisscross wrote: post #47
conanbatt wrote: post #46

Earlier quoted context omitted.

So a company has to claim it loses money to be absolved of any moral burden? IF only the SEC accepted that.

> So a company has to claim it loses money to be absolved of any moral burden? State and federal governments aren't private companies.

I think you're missing his point. Those very entities have agencies which are both "protecting" the public by imposing regulations that prevent them from expenditures with negative expected value, and at the same time peddle them.

Imagine if there were a state-run cigarette producing public benefit corporations alongside public health departments. You'd have two agencies, one cultivating and the other discouraging the same toxic habit at great public expense. We already have this with various OTB/gaming commissions and gambling addiction services. It's an insane conflict of interest to waste tax dollars on.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#67

Post by ball_of_lint »

Anon1096 wrote: post #59
FeepingCreature wrote: post #34

Earlier quoted context omitted.

This wouldn't per se force owners to give up equity, it'd merely prevent them from making it available to a limited circle of investors.

But in doing so one or more of the equity owners would have to give up a percentage of their holdings. So yes, you would be forcing people to sell equity when they'd potentially rather hold it.

This could be done without forcing anyone to sell if companies were allowed to be listed with very little volume/liquidity. Essentially those who own shares could publicly trade them, but there would be no IPO, and possibly no shares available to buy.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#69

Post by tanderson92 »

charlesdm wrote: post #15
tspike wrote: post #5

Earlier quoted context omitted.

Could you explain how this would work in practice? If I'm allocating a percentage of my salary to, for example, Vanguard's total stock market index, how would that get siphoned?

One simplified example: say people are investing in a passive property fund. Those funds generally yield around 3 to 5% per year. You're a smart entrepreneur. You build a huge skyscraper for $200m. You manage to generate a yield of 10% on that $200m. Most of the $200m is debt levered against the asset. The building subsequently gets sold to the fund on a yield basis. They'll pay $400m, i.e. $20m in yield p/a = 5%. Sm…

Typical passive investing vehicles are float-adjusted. That means your analogy is inapt to something like a Total Stock Market fund.

Re: Stock and Bond Markets Dethroned: Private Fundraising Is Now Dominant

#70

Post by SkyMarshal »

JumpCrisscross wrote: post #12
sol_remmy wrote: post #9

Thank goodness the government protects me, a non-accredited investor, from investing in any private companies! I'm too stupid to make investment decisions without going broke! https://passiveincomemd.com/not-secret-society-accredited-in...

I used to be skeptical of accredited investor requirements [1] until cryptocurrencies happened. That an entire space can (a) go from zero to fraud in the blink of an eye and (b) not only ignore the delineation between gambles and core investments, but develop a collective disdain for it and anyone espousing it, has me convinced of the rule's wisdom. Investing in start-ups costs money. Diligence costs money, negotiati…

>There is no person (a) who doesn't meet the accredited investor requirement and (b) for whom an illiquid, volatile security like start-up equity is a prudent risk-reward decision.

I used to think this too until I saw a bunch of teenagers invest their allowance and part-time job money into a new industry that was open to them and get rich.

It made me wonder if perhaps the definition of accredited investor should be expanded to people who have not only a lot of capital but also lot of time till retirement, since there's an equivalency, and who can afford to take risks and make mistakes in their 20s b/c they still have time to make up for it later.

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