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The Long-Term Stock Exchange Is Worth a Shot

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

#121

Post by jmh530 »

chirau wrote: post #60
jmh530 wrote: post #47

Earlier quoted context omitted.

There is some research in political science on paying for votes in elections. They came to the conclusion that you should pay $x and receive sqrt(x) votes. 100 dollars -> 10 votes. I would think the same reasoning would work here. Hold stock $x days, receive sqrt(x) votes (years is tricky because you can hold less than 1 year and the value increases quite a bit during that period).

Would such a political system not spiral into chaos really rapidly?

It's all theoretical. God knows.

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

#122

Post by Iv »

dna_polymerase wrote: post #107
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.

And how does this add value anywhere?

A timestep of a day seems to have all the benefits of regular stock exchanges without any drawbacks.

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

#123

Post by Iv »

somecontext wrote: post #120
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…

> When Steve Jobs died, which was obviously an event that would have an impact on Apple's shares, the quotation was suspended for a day, so that people could take their time to evaluate the significance of the event. Steve Jobs's death was announced after the closure of New York markets on October 5, 2011. Apple stock shares traded in Frankfurt the next day: https://www.theguardian.com/technology/2011/oct/06/apple-st…

Ah yes, they delayed the announce until after the closure. I don;t remember on which similar event they suspended trading for a day.

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

#124

Post by Iv »

RhysU wrote: post #89
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…

How often does someone decide they want to sell (buy)? Market makers are reacting to demands for immediate liquidity in a distributed marketplace comprised of multiple equities exchanges.

How is that the stock exhcange's responsibility to provide for liquidities?

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

#125

Post by Iv »

HolyLampshade wrote: post #90
RhysU wrote: post #89

Earlier quoted context omitted.

How often does someone decide they want to sell (buy)? Market makers are reacting to demands for immediate liquidity in a distributed marketplace comprised of multiple equities exchanges.

To add to this, this model only works if the entire market place operates this way. If any other venue is providing pricing updates a venue that is halted, or somehow contributing to a delay in pricing updates, is going to be left behind. In the hypothetical "one quote a day" market, the quotes will be insanely wide to account for the risk that the natural price of product moves through the quote (with no way to prov…

It won't be insanely wide, it will be on par with the intra-day variations. What they may make a seller lose are on par with what they would lose by taking a few hours to think about their decisions.

> If any other venue is providing pricing updates a venue that is halted, or somehow contributing to a delay in pricing updates, is going to be left behind.

My suspicion is that some companies would prefer to only have investors instead of speculators. I suspect that a SE with such rules would favor long term investments over short term profits.

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

#126

Post by jessriedel »

hobbyjogger wrote: post #78
jessriedel wrote: post #65

Earlier quoted context omitted.

> tenure voting would surely be based on the tenure of the beneficial owner This only works if the intermediate holder of the stocks is coordinating with the exchange and/or company. The problem is that there is a financial incentive for someone else who is not working with them to buy up the stock, immediately resell it with the normal guarantees (that they will pass on dividends, allow voting by proxy etc.), but no…

> The problem is that there is a financial incentive for someone else who is not working with them to buy up the stock, immediately resell it with the normal guarantees (that they will pass on dividends, allow voting by proxy etc.), but not pass on such re-sell information to the exchange/company. Does the exchange/company have some sort of a right to prevent resale unless tenure information is tracked? Yes, absolute…

> As a result, brokers (i.e. your hypothetical entity that gobbles up all the shares and then loans them or sells economic/voting rights) must be registered with FINRA and are subject to very extensive regulations, including rules from FINRA, the SEC and the public exchanges.

I still don't get it, length and complicatedness of rules notwithstanding. Why can't a holding company not subject to these regulations simply buy from the broker and then resell? Why can't I personally buy and hold a bunch of shares and then sell stakes to people in my office completely off the books? What if I only sell a partial stake (e.g, 90% of dividends and 40% of voting rights)? Repackaging/Securitization happens all the time and in a million forms; is every allowed form simply listed exhaustively in a broker contract somewhere?

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

#127

Post by somecontext »

Iv wrote: post #123
somecontext wrote: post #120

Earlier quoted context omitted.

> When Steve Jobs died, which was obviously an event that would have an impact on Apple's shares, the quotation was suspended for a day, so that people could take their time to evaluate the significance of the event. Steve Jobs's death was announced after the closure of New York markets on October 5, 2011. Apple stock shares traded in Frankfurt the next day: https://www.theguardian.com/technology/2011/oct/06/apple-st…

Ah yes, they delayed the announce until after the closure. I don;t remember on which similar event they suspended trading for a day.

According to his death certificate, Steve Jobs died at 3pm PT on October 5, 2011. http://www.nytimes.com/2011/10/11/business/steve-jobss-cause...

New York markets close at 4pm ET, which is 1pm PT.

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

#128

Post by dna_polymerase »

Iv wrote: post #122
dna_polymerase wrote: post #107

Earlier quoted context omitted.

> 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.

And how does this add value anywhere? A timestep of a day seems to have all the benefits of regular stock exchanges without any drawbacks.

Just wanted to point this out. HFT is not only really fast trading in order to gain from the typical "sell higher than you bought" scheme. Of course front-running adds no value. Though of course those companies will say that the "add liquidity". Which is BS.

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

#129

Post by hkmurakami »

eries wrote: post #98
hkmurakami wrote: post #27

Earlier quoted context omitted.

I looked at the people backing the exchange and as far as I can tell, no one actually has a proper finance background, let alone a background in exchanges (which is, from what I've read, a pretty esoteric and specialized area within finance). The idea of Eric Reis running a stock exchange is... strange to me.

Me too! Luckily the rest of the team is way more qualified

Hi Eric. I recall the times when making long term equity holdings tax advantaged (ex: 0% cap gains after holding for 10 years) as a path to achieve similar goals to what LTSE is trying to achieve.

Details (and general HN cynicism) aside, we hope your venture is a success.

As a greater man than I once said, your success is our success. We'll be rooting for you.

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

#130

Post by jshaqaw »

andreasklinger wrote: post #114
jshaqaw wrote: post #67

Earlier quoted context omitted.

Does anyone report to you? If they do, how would you respond if they said “I’d like to check in with you on my progress/metrics/etc... just once a year.” Sound like a good idea? It’s a terrible idea for managing people and a terrible idea for corporate governance. As high performance organizations move to daily if internal accountability it’s laughable that they complain accountability every 90 days to them owners of…

there is a difference between long term planning and short term execution yes short term execution should be monitored but it should not lead long term execution plans

Complaints about how short term focused equity investors to the detriment of long term planning almost always come from people who either don’t really understand what active equity investors do or are entrenched management trying to bury bad short term execution under th hazy and impossible to refute excuses of “we have a long term plan.”
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