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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

#81

Post by throwaway2041 »

KKKKkkkk1 wrote: post #80
csense wrote: post #4

It's a tough problem. In the late 1990's, there was a big wave of accounting scandals (Enron, Worldcom, etc.) Which led to heavy regulation (the Sarbanes-Oxley Act). The Act was a well-intentioned attempt to protect retail investors from crooks. The problem's that compliance is so burdensome and expensive that firms don't want to enter the public markets until they're already large (or if they're forced to when their…

I doubt that investing in early-stage unicorns is the best way for the poor to get out of poverty.

No, but more folks in the middle class might be able to remain in the middle class if their modest portfolios had access to high-growth companies, ideally through index funds rather than individually-picked stocks

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

#82

Post by psyc »

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…

Often this argument isn't really about whether everyone is collectively 'better off' by some particular metric. It's about how much of a nanny state it takes to get that result, and whether that's contrary to the spirit of freedom of association. In other words, money is not the only value. Liberty itself is a value.

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

#83

Post by gcb0 »

throwaway2041 wrote: post #81
KKKKkkkk1 wrote: post #80

Earlier quoted context omitted.

I doubt that investing in early-stage unicorns is the best way for the poor to get out of poverty.

No, but more folks in the middle class might be able to remain in the middle class if their modest portfolios had access to high-growth companies, ideally through index funds rather than individually-picked stocks

only in hindsight. but if they were part of an index the stocks would be even more expensive to buy into reducing gains overall. and remember that unicorns do not pay dividends.

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

#84

Post by hkmurakami »

throwaway2041 wrote: post #81
KKKKkkkk1 wrote: post #80

Earlier quoted context omitted.

I doubt that investing in early-stage unicorns is the best way for the poor to get out of poverty.

No, but more folks in the middle class might be able to remain in the middle class if their modest portfolios had access to high-growth companies, ideally through index funds rather than individually-picked stocks

What weighting index of all IPO stocks during the sitcom era would produce a performance boosting return? Does AMZN fix all woes?

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

#85

Post by smallnamespace »

lr4444lr wrote: post #66
JumpCrisscross wrote: post #47

Earlier quoted context omitted.

> 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 th…

> 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.

Those two things aren't necessarily in logical contradiction.

There will always be demand for gambling and get-rich-quick schemes. Maybe it's better that the state monopolizes and regulates it (and makes it clear that this is not an investment), rather than letting private entrepreneurs take advantage of that same habit in even more effective and unscrupulous ways.

The state is not a particularly efficient entity, so perhaps letting it do evil in a bumbling and clumsy manner is the least overall evil.

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

#86

Post by avar »

andrewtbham wrote: post #19
avar wrote: post #11

Earlier quoted context omitted.

I don't know if this is true, but if it is wouldn't there be a really obvious pattern of the market value of initial IPOs going up compared to before SOX was passed? Is there such a telltale pattern?

It is true https://www.vox.com/2014/6/26/5837638/the-ipo-is-dying-marc-...

This article is just cherry-picking examples of specific tech companies and trying to make the point that SOX is onerous on that basis.

If instead, you look at NASDAQ's own website of recent IPOs[1] and look at the market cap of those companies there's plenty of smaller companies to be found.

E.g. BWB went public less than a month ago and has a market cap of ~300M, meanwhile that Vox article is claiming Netscape's IPO of 2B would be impossible today. AIHS is hovering at ~150M and DNJR at ~60M, both companies public in the last month.

Again, maybe it's true, but given all that I'm more willing to believe that the tech sector in particular just has more access to private equity than it did 20 years ago, and thus there's less pressure to go public. It's more of a hassle to be public, and that applied before SOX, at the very least you need to deal with nosy shareholders wondering how their money's being used.

1. https://www.nasdaq.com/markets/ipos/activity.aspx?tab=pricin...

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

#87

Post by pjc50 »

csense wrote: post #4

It's a tough problem. In the late 1990's, there was a big wave of accounting scandals (Enron, Worldcom, etc.) Which led to heavy regulation (the Sarbanes-Oxley Act). The Act was a well-intentioned attempt to protect retail investors from crooks. The problem's that compliance is so burdensome and expensive that firms don't want to enter the public markets until they're already large (or if they're forced to when their…

> hurting them by putting growth opportunities out of their reach.

You're asserting that the "alpha" of the private opportunities is higher, even after you've accounted for risk. This should be amenable to statistical evidence? Including all the VC-funded duds and collapsed buyouts like Toys R Us.

I'm not sure that retail investors want this kind of risk profile; it seems to me that the demand is phrased in terms of interest rates. And to get back to higher interest rates we'd need more inflationary pressure from growth - which we don't have.

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

#88

Post by pjc50 »

conanbatt wrote: post #25
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…

If the state used that argument, it wouldnt be able to run lotteries. It is, as many other measures, used by some to profit at the expense of others. Investors have their competition blocked, and ignorant. If a company had the opportunity to go public a lot earlier, they would gain massive leverage over the traditional investors, which means better terms and cheaper money. Cryptocurrency showed precisely the opposite…

> Who wants to invest in cryptokitties when the other startup has actuall revenue and sales

If you look at historical investment patterns, it's often the big startups with no revenue and no sales that raise the most money. It's almost a disadvantage to have revenue, unless it's growing meteorically.

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

#89

Post by saalweachter »

kspaans wrote: post #40
pcwalton wrote: post #33

Earlier quoted context omitted.

State lotteries are unethical for many of the same reasons why accredited investor requirements exist.

It's a lot easier to fix though: make minimum ticket prices higher. At $20 or $100 each, there is more sticker-shock friction to prevent overspending on lottery tickets.

You should also cap the max jackpots. The multi-hundred-million jackpots generate a bit of a mania.

Also, if you wanted to disincentivize lotteries, but not ban them outright, you could start taxing them - up front, not the behind-the-scenes cut states get now. Add a 50% tax on lotto tickets and a 50% surtax on winnings and most people will be too disgusted to play.

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

#90

Post by ataturk »

I've had much to say about this before. Basically, the big institutional investors have no other way to gain more alpha than to cut out everyone else. They're so big they can get away with it. The problem is that it cuts out every small investor trying to save for their own retirement, and due to inflation, regular people have been thrust into purchasing riskier and riskier investments in order to try and stay ahead of it. It's a race we aren't going to win.
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