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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

#161

Post by levi- »

eries wrote: post #122
jbob2000 wrote: post #115

Earlier quoted context omitted.

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.

We will endeavor not to list such companies

> We require companies that list with us to adopt corporate governance that aligns their behavior and incentives to the long term.

How will you handle companies that eventually go against the required guidelines?

Could a company become permanently unlisted? And how would that affect any shareholders of the company who purchased through LTSE?

Re: The Long-Term Stock Exchange Opens for Business

#162

Post by LatteLazy »

BiteCode_dev wrote: post #64
LatteLazy wrote: post #52

Earlier quoted context omitted.

It prevents capital being mis-allocated. It turns out that is one of the most important things to do in modern, capital intensive, economies. It also means people can invest for shorter periods and that means more capital is available for investment. This has a double bonus where it reduces the risk of investments again making more capital available...

I don't have the background to understand your answer, can you make it simpler with some examples ?

No worries, it's all quite counterintuitive :)

Imagine if you're a would be investor. You're money is available now to invest. So you want the market to be open to let you buy. Otherwise that cash is just sat there waiting. Similarly, you want to invest all your money. But if you know you won't be able to get it back for X period of time then you can't can you? You might not even know how long you can invest for: I might reasonable expect not to need some cash till Christmas time but if I lose my job tomorrow I want it now please!

So a market where you can buy and sell rapidly makes you more able and more likely to invest. That's good for you as you can use spare cash productively and make a profit while still being safe if you suddenly have a change in circumstances. It's also it's good for the company you're investing in as they can raise capital quickly and there is more capital available. And all of this means more growth and lower costs and that means more tax money for social services and more jobs for other workers etc.

The analysis for the people receiving the investment is similar but a bit more complex because the company doesn't just get investment, it also get's information: a rising share price tells you you should expand, high prices in general indicate a great time to start new businesses, a competitor whose share price falls while your one rises has issues and might be open to a merger\takeover etc.

Re: The Long-Term Stock Exchange Opens for Business

#163

Post by MrPowers »

eries wrote: post #143
kenned3 wrote: post #140

Amazing to see you here Eric. Having worked in Equities most my life I love the idea you are putting forward here. We really need to stopthinking in terms of "next quarter" and structure our markets for the longer term. Question for you : What are your thoughts on corporate buybacks on your exchange?

I think buybacks have occasional legitimate uses, but there’s a reason that they were considered basically illegal not that long ago I think if companies are sincere in their desire to use buybacks only for good purposes, they should commit to report “EPS net of buybacks”

Aligning executive compensation with shareholder interests would also help. Stock options incentivize executives to buy back shares (boost the price, do a buy back, exercise options).

Re: The Long-Term Stock Exchange Opens for Business

#164

Post by tempsy »

The irony of launching now is that the Federal Reserve has created an environment with zero rates and endless cash that has made speculative stocks much more attractive in the traditional public markets. The stock market has become very forgiving if you can show top line growth regardless of whether you're profitable or not.

Re: The Long-Term Stock Exchange Opens for Business

#165

Post by maerF0x0 »

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.

>We require companies that list with us to adopt corporate governance that aligns their behavior and incentives to the long term.

I've heard many a company say one thing and act another. How will this be different? Will delisting be the repercussion of short termism?

Re: The Long-Term Stock Exchange Opens for Business

#166

Post by mguerville »

I assume companies will still need to be "priced" and then supply/demand will affect prices, do you intend to have any unique mechanisms to reduce volatility and short termism by investors or is the idea to be hands off and control the long term focus in "softer" ways?

Re: The Long-Term Stock Exchange Opens for Business

#167

Post by vmception »

dasudasu wrote: post #149
eries wrote: post #143

Earlier quoted context omitted.

I think buybacks have occasional legitimate uses, but there’s a reason that they were considered basically illegal not that long ago I think if companies are sincere in their desire to use buybacks only for good purposes, they should commit to report “EPS net of buybacks”

They do. The number of shares outstanding is publicly reported. You can already divide earnings any way you want yourself. To me shares buyback is just the counterpart to selling shares on the open market to raise capital. It’s anti-dilutive and can be in the interest of shareholders.

Disclaimer: I can take any side of the regulatory pendulum with a straight face, and that also means pointing out accurate statements with no real opinion on either.

Buybacks were illegal because it falsely showed demand in the market. False demand is a key point in modern market manipulation and fraud cases.

Given that reality dissolved 30 years ago, of course we are all familiar with the arguments "It’s anti-dilutive and can be in the interest of shareholders"

Re: The Long-Term Stock Exchange Opens for Business

#168

Post by dtrailin »

Given current 50x multiples and high valuations for unprofitable tech companies I don't think there is much evidence that that current stock markets are unable to value long term ventures. As well the extent to which a company is expected to deliver quarterly results is more defined by their board and capital structure than anything in inherent to NYSE or the NASDAQ.

Re: The Long-Term Stock Exchange Opens for Business

#169

Post by safog »

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 does that mean concretely? Will earnings reports still be quarterly? I guess I'm trying to figure out why the exchange has to do anything here. There's plenty of investors and companies that think long term with BRK and its investors being the most prominent.

Digging a bit more, on the investor side, there are value investors who look for solid, if unspectacular businesses at a price point and buy and hold over long periods of time.

On the company side, there are exceptional founder run businesses like Amazon, FB etc. that don't care very much what things look like in the short term (Bezos claims he's willing to be misunderstood for long periods of time for example).

Re: The Long-Term Stock Exchange Opens for Business

#170

Post by eries »

mguerville wrote: post #166

I assume companies will still need to be "priced" and then supply/demand will affect prices, do you intend to have any unique mechanisms to reduce volatility and short termism by investors or is the idea to be hands off and control the long term focus in "softer" ways?

Yes we do, but there’s not really a good way to summarize our plans here. Suffice to say we are keenly aware of the need to reduce the aspect of volatility that is driven by speculators
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