Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

The Long-Term Stock Exchange Is Worth a Shot

bloomberg.com

Post reply on HN
Print view View original

101–110 of 135 posts

Re: The Long-Term Stock Exchange Is Worth a Shot

#101

Post by erikb »

timthelion wrote: post #16

This article misses the reason why short term investors are potentially harmfull. The author writes: "One basic and important implication of this theory is that, if you hold a share of stock for a minute, you will want the company to increase its long-term earnings power during that minute. If, during your minute of ownership, the company announces "we have sold all our factories and ruined our productive capacity, b…

What I don't understand yet, is why the company would care about the short term investor. Sure the short term fluctuations are high. But on the long term they should average out based on average long term value of the company. Shouldn't the CEO just ignore the stock price swings?

Re: The Long-Term Stock Exchange Is Worth a Shot

#102

Post by eries »

dmurray wrote: post #58
cujic9 wrote: post #11

Earlier quoted context omitted.

Contrived? Yes. Meaningless? No. Voting rights are powerful. That's the point of the long-term exchange. In existing exchanges, going long and short in equal amounts on the same stock simply cancel each other out. But in a "long-term exchange", taking this same position (or lack thereof) gives me a valuable asset: voting power that grows over time.

> Voting rights are powerful. That's the point of the long-term exchange. > In existing exchanges, going long and short in equal amounts on the same stock simply cancel each other out. Not really, for voting purposes. You can buy the stock, borrow the stock, sell the borrowed shares and end up with "free" voting rights and no economic exposure to the stock. I say "free" because you may have to pay someone a few perce…

Actually our mechanism prevents this. It’s pretty clever if I do say so myself, but until we go public with the details you’ll have to take my word for it

Re: The Long-Term Stock Exchange Is Worth a Shot

#103

Post by eries »

stale2002 wrote: post #54
cujic9 wrote: post #26

Earlier quoted context omitted.

Yes, but... the article suggests that in the long-term exchange, the voting power resets with a change in ownership. So while a share that has accumulated a lot of voting power is valuable to me, you wouldn't necessarily pay any more for it, since the power doesn't transfer to you.

Well, but the original owner loses the power. So if you want to convince an owner to throw away their voting power, you'd have to pay them a higher price.

How bout that...

Re: The Long-Term Stock Exchange Is Worth a Shot

#104

Post by eries »

joshu wrote: post #41

My gut sense is that the important time period is length of hold going forward, not length of past hold. Maybe the vote strength should instead go with the period of lockup instead? That is, I agree to hold my shares for ten years, so I get ten votes. Perhaps it could even be slightly nonlinear with respect to the length of time? (years * 1+log(years)) or similar? Edit: LTSE reminds me of LTCM. Not a great connotatio…

LT is ready for a comeback

Re: The Long-Term Stock Exchange Is Worth a Shot

#105

Post by eries »

skywhopper wrote: post #94

This seems like a lot of very highly directed, complex, and confusing artificial policy-making in order to achieve something that could probably be approximated far more simply and understandably by placing a small tax on equity transactions. Long term investors would be barely affected, high frequency traders would be forced to re-evaluate their approach, and the government could collect some highly needed revenue.

If you get the political coalition assembled to make this, please give me a call

Re: The Long-Term Stock Exchange Is Worth a Shot

#106

Post by erikb »

Timothycquinn wrote: post #35

IMO, short term investing including stock options does nothing but move money from one group to another by creating artificial Flux. The stock market for the most part is a closed cycle in which a large group of investors, mostly the loosing ones, think that the stock market creates value and the ones who make the money from these ignorant "investors" are completely aware of and dependent on the loosing parties stupi…

Oha, you really seem to have hit a self-illusioning wound here.

And I'd say actually stock trading is the high stake gambling. If you increase the gambling sizes too high with card games etc, the public will believe it's unserious. But if you put it in a context of business, suits, and skyscrapers then it seems serious enough. That's why you cannot just make Casinos with bigger stakes and instead need to rely on that farce.

Re: The Long-Term Stock Exchange Is Worth a Shot

#107

Post by dna_polymerase »

Iv wrote: post #82

When I learned about high-frequency trading, I toyed with the idea of opening up a stock-exchange with different rules: - one quote per day - transactions of the day are processed in a random order (using a provable random deterministic algorithm) - shares have to be kept for at least 3 months (Warren Buffet recommends 6 months) before being sold. When Steve Jobs died, which was obviously an event that would have an…

> The prospects of future profits do not change every nanosecond.

That's what people get wrong all of the time. Most of HFT is not about seeing a trend and acting on it. Most of that is front-running on data obtained from deals with brokerage firms and the likes.

Re: The Long-Term Stock Exchange Is Worth a Shot

#108

Post by eries »

ThrustVectoring wrote: post #49
notahacker wrote: post #42

Earlier quoted context omitted.

Perhaps you'd tie voting rights to a named human beneficial owner, so the prospective purchaser of your shell corporation wouldn't inherit them[1] Though it might have the interesting side effect of fund managers who exercise their voting rights being better compensated and staying in their jobs longer... [1]possible to devise some kind of unusual contractual arrangement where the "beneficial owner" retained formal t…

You can't ban separating out economic interest and formal title to the shares without banning options, forward contracts, and other derivatives on the stock. Like, these are not unusual contractual arrangements. These are standardized and sold on the market. Put options transfer the downside risk to the writer, call options transfer the upside risk to the buyer, futures contracts essentially do both.

Actually you can do this, without banning those instruments. You have to find a way to make sure when someone creates one of those derivatives the system automatically forfeits the associated votes.

Re: The Long-Term Stock Exchange Is Worth a Shot

#109

Post by eries »

sseveran wrote: post #53
danmaz74 wrote: post #29

Earlier quoted context omitted.

If I got this correctly, when you sell your shares with high voting power, they lose their high voting power.

We can get around this easily enough with a Total Return Swap. This way we can move the economic interest around with out ever moving the shares.

Our system actually handles this gracefully. If you change the beneficial owner, that’s the same as selling the shares (for voting purposes)

Re: The Long-Term Stock Exchange Is Worth a Shot

#110

Post by eries »

erikb wrote: post #97
eries wrote: post #96

Hey everybody, Eric Ries here, founder of the LTSE. I am coming late to the thread as I’ve been focused on launching my new book and am only seeing this now. I love a lot of the comments here. I think many of the assumptions both in this piece and in the comments are reasonable guesses about what we are doing - but in a lot of cases wrong. Part of the reason it has taken me more than five years to figure out how to b…

Your name sounds familiar. Can you give a short summary of what else you've been doing? *edit: Ah, I found something myself. You're the lean startup guy right? https://en.wikipedia.org/wiki/Lean_startup

Indeed I am :)
Post reply on HN