Best of luck Eric. I can feel the ship turning.
Thanks
The Long-Term Stock Exchange Opens for Business
191–200 of 561 posts
Re: The Long-Term Stock Exchange Opens for Business
#192Earlier quoted context omitted.
>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?
I think part of the idea is between reporting requirements & articulated statements about what goes into that reporting, by failing to report or failing to live up to those goals, you get to use the existing teeth (and defenses) associated with investment fraud. For any constructable issue rather than just purely quarterly financials, you can hold the company to account, and protect decisions that might be for some n…
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Re: The Long-Term Stock Exchange Opens for Business
#193Earlier quoted context omitted.
Given that companies like Uber, which are not only unprofitable but don't even have a clear path to profitability at any time horizon, trade at fairly high valuations, what's the basis for the belief that investors are irrationally focused on short-term results? Should Uber actually trade at higher valuations than it does today? Why isn't some rational subset of investors capitalizing on this opportunity?
I don’t think multiples are the issue. The question is: are companies set up to support a philology of long-term decision making? Talk to almost any middle manager in any public company in America if you are confused about whether this is the common case today
If investors are not irrational about the long term, then I don't see how there can be a problem. Prices will correctly reflect long-term expectations, and managers who are paid in options/hold equity will face the right set of incentives. If managers focus on the short term it's probably because it maximizes long-term value.
Re: The Long-Term Stock Exchange Opens for Business
#194Suppose LTSE becomes a thing, and they find some companies that they can certify as Long-Term(TM). What stops those shares from being traded on some other exchange, eg BATS? What is it about the venue that makes it special? It seems that once an investor thinks a company has some desired characteristic, all they'd care about is where to get the shares as cheaply as possible.
I think the companies can be traded on any exchange - it's not really a function of stock price. The LTSE kind of venn-diagrams around the requirements of the other exchanges (for now). So a company is then held to different (greater) standards (even if its also listed on other exchanges).
Re: The Long-Term Stock Exchange Opens for Business
#195I 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.
This might not be a great comparison, however, when Japan was ascendant some of that might was attributed to their “long-view”. Companies on the nikkei were government backed and didn’t have the same quarterly results demands seen in other exchanges... and that was proven right to about the mid-90s. Then it was revealed that those companies on occasion invested in areas they had no expertise or had poor returns. Not that the current system of chasing quarterly results is good, but how is the Japanese experience avoided?
Re: The Long-Term Stock Exchange Opens for Business
#196What a bold move, Eric! What does a Minimum Viable Product for a stock exchange look like?
Re: The Long-Term Stock Exchange Opens for Business
#197Earlier quoted context omitted.
The old Dutch joint stock trading companies were required by their charters to liquidate and return all capital to investors every couple of years. That enforces strict discipline on management. However after a few decades of that owners began to trust managers enough that a permanently capitalized enterprise seemed more efficient. The development of modern financial capitalism is important and fascinating. These str…
Fascinating. Do you have any suggested books or videos that track the history of finance?
The Rise of Financial Capitalism: International Capital Markets in the Age of Reason (Studies in Monetary and Financial History) https://www.amazon.com/dp/0521457386/ref=cm_sw_r_cp_api_i_i-...
Manias, Panics, and Crashes: A History of Financial Crises, Seventh Edition https://www.amazon.com/dp/B017J5HBMS/ref=cm_sw_r_cp_api_r.pw...
Devil Take the Hindmost: A History of Financial Speculation https://www.amazon.com/dp/0452281806/ref=cm_sw_r_cp_api_i_.a...
A History of Interest Rates, Fourth Edition (Wiley Finance) https://www.amazon.com/dp/0471732834/ref=cm_sw_r_cp_api_i_-c...
A Splendid Exchange: How Trade Shaped the World https://www.amazon.com/dp/0802144160/ref=cm_sw_r_cp_api_i_Hg...
Re: The Long-Term Stock Exchange Opens for Business
#198“LTSE has joined with several organizations to build and launch a year-long experiment to support the economic mobility of Black entrepreneurs impacted by COVID-19.” (ltse.com)
Congratulations, you think you do the right thing and became racist.
Re: The Long-Term Stock Exchange Opens for Business
#199What a bold move, Eric! What does a Minimum Viable Product for a stock exchange look like?
You’re looking at it. MVP doesn’t mean “fast” in some absolute sense. It just means fast compared to the underlying cycle time of the relevant industry. I think we did pretty well with this one.
That said, there were many many many MVPs that you don’t see that informed the direction we are at now.
In some way our private company tools are also an MVP of sorts: https://ltse.com/tools/
Re: The Long-Term Stock Exchange Opens for Business
#200As we're seeing right in our face on the West Coast of the US right now, climate change is going to continue to get worse, affecting the globe at least as much as the pandemic and for much longer unless we take serious action now. Does the LTSE structure support companies oriented towards developing rapid climate solutions that will pay off in the longer term, but not at the rate of typical venture investments? If th…
Yes. I don’t think any other platform is better suited to such companies