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The Long-Term Stock Exchange Opens for Business

blog.ltse.com

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Re: The Long-Term Stock Exchange Opens for Business

#111

Post by eru »

superqd wrote: post #79

Hmmm, a bit disappointed after reading their blog and site. I expected that they'd integrated some clever rules around stock trading itself in order to force, or encourage, long term thinking. I expected something along the lines of, "no shorting allowed", "stocks must be held a minimum of 6 months", etc. There was nothing like that, all they have is the rule, "come on guys, think long term". I fail to see how this w…

> I expected something along the lines of, "no shorting allowed", [...]

That would at least be an attempt. Though to be honest, (other people doing the) shorting is actually very good for the long term shareholder.

> The problem with short term thinking isn't from companies or company leadership, they are reacting to the natural short term fluctuations in their value because of the short term thinking of investors.

It's not that investors are short-termist. Far from it. See eg how shareholders react to Amazon or Tesla.

The problem is the principle-agent conflict: shareholders in general have a very hard time monitoring management. It is neigh impossible to tell a manager with a grand vision that will pay off in 20 years from a manager who burns capital on harebrained schemes for 20 years. Especially impossible to tell before those 20 years are up.

That's why investors are so keen on early and hard to fake signals. Returning cold hard cash to investors is one of those signals.

Re: The Long-Term Stock Exchange Opens for Business

#113

Post by jl2718 »

x87678r wrote: post #25

The only way I think investors could invest more in companies with a long term view is better margining so you could borrow money to invest in companies without getting margin called. Eg you can buy a house with 5% down, but you can't do this with stocks because normal volatility means you'll likely be wiped out.

I suppose this is possible if it was an amortized loan against personal liability like a mortgage. Clearly there is more volatility in the asset, so the risk would have to come down by insurance. I think it would get quite expensive to service these loans.

Re: The Long-Term Stock Exchange Opens for Business

#114

Post by rglover »

eries wrote: post #102
fastball wrote: post #97

I have a question: what exactly is different? Wasn't clear in the blog post. Do you prevent day-trading or something similar?

We require companies that list with us to adopt corporate governance that aligns their behavior and incentives to the long term. I know that doesn’t sound super sexy but we believe this is a high-leverage point for reforms We will have more to say on reforms that relate to reading in the future, but we don’t limit the ability of “tourists” to trade in and out of stocks as normal.

Will those corporate governance guidelines be publicly available? Are shareholders able to influence these guidelines at all?

Re: The Long-Term Stock Exchange Opens for Business

#115

Post by jbob2000 »

eries wrote: post #102
fastball wrote: post #97

I have a question: what exactly is different? Wasn't clear in the blog post. Do you prevent day-trading or something similar?

We require companies that list with us to adopt corporate governance that aligns their behavior and incentives to the long term. I know that doesn’t sound super sexy but we believe this is a high-leverage point for reforms We will have more to say on reforms that relate to reading in the future, but we don’t limit the ability of “tourists” to trade in and out of stocks as normal.

What do you define as long term? At some point, the best answer for longevity is for a company not to exist at all, given that the purpose of most companies is extraction, or some sort.

Re: The Long-Term Stock Exchange Opens for Business

#116

Post by nicoburns »

JackFr wrote: post #86
nicoburns wrote: post #6

Earlier quoted context omitted.

I have no idea if this solves the problem, but I think the problem is shareholders. Specifically, a proportion of shareholders favour short-term profits, and those shareholders outcompete the long-term minded shareholders leading them to have greater influence over time. These short-term shareholders are extracting value at the expense of wider society, and it's a massive problem.

If you need money over the long term and you don't want to relinquish control, we have a thing called the bond market. Borrow for 5, 10, 30, heck, even 99 years and your interest is tax deductible! (Borrowing longer than 99 years the IRS may want to talk to you. Your bonds start to look like preferred stock.) Wait -- the bond market won't lend to you cause they don't trust your ability to generate that return for the…

The public markets aren't just designed to maximise shareholders value. Maximising shareholder value is supposed to be a means to maximising societal value. If the shareholder model isn't doing that then it isn't fit for purpose.

Re: The Long-Term Stock Exchange Opens for Business

#117

Post by maximilianroos »

I can understand the effort to weigh firm's incentives towards longer-term incentives, and I can see how the suggested changes to companies' structure would achieve that.

But why do those changes need to be coupled to the exchange a company assigns as its primary listing venue?

Re: The Long-Term Stock Exchange Opens for Business

#119

Post by eries »

dfabulich wrote: post #112

It says you’re open for business. What business is now open? Can I buy a share of a company on LTSE today? Can I list a company on LTSE? (I can’t find a way to do either of those things on your website.)

Yes, you can do both. Trades happen through stock brokers as with any other exchange. You can track the exchange’s daily trading volume here: https://markets.cboe.com/us/equities/market_share/

The listing application (and attendant legal docs) is here: https://longtermstockexchange.com/listings/documents/

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