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U.S. regulators approve the Long-Term Stock Exchange

reuters.com

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Re: U.S. regulators approve the Long-Term Stock Exchange

#131

Post by matwood »

bufferoverflow wrote: post #62
mises wrote: post #38

Earlier quoted context omitted.

Retail is left with "the scraps" because it is much riskier to invest early on. Companies that fail early aren't heard about as much, because Joe Average's pension plan hasn't invested in them, but are still plentiful. And maybe Joe Average's pension plan shouldn't be investing in what are effectively PE-stage firms. I don't know if I'm right about this, but it seems such an exchange might contribute to something lik…

A Joe Average is legally allowed to walk into a casino and lose all his money, pretty much guaranteed over long term. A Joe Average is legally allowed to play all kinds of lotteries, pretty much guaranteed loss over long term. A Joe Average is legally allowed to invest his 401k in the riskiest penny stock one can find. This has nothing to do with risk, it's 100% gate keeping.

> A Joe Average is legally allowed to invest his 401k in the riskiest penny stock one can find.

Most 401ks do not allow individual stocks. Some do, but often with only a small % of total account value.

IRAs typically act more like a general equity account, but by that point I would argue a person is already a bit more financially savvy. If they have taken the time to either open an additional retirement account or roll a 401k over from a prior job, then they have some idea about penny stock risk.

Re: U.S. regulators approve the Long-Term Stock Exchange

#132

Post by jstanley »

wcoenen wrote: post #112
jstanley wrote: post #25

Earlier quoted context omitted.

How exactly do you believe high-frequency traders "eat up" pension funds? The only time any limit order gets executed is when it is the best price available. From the other perspective, the price a market order is matched at is the price of the best limit order available. In the absence of high-frequency traders, the best price available will be worse , not better.

Example of how HFTs would "eat up" money, at least in the past: many instruments trade on multiple exchanges. So when a trader wants to execute what is conceptually a single large order, in practice this order may need to be split and routed to multiple exchanges. HFTs will see the first order executing on one exchange, and will then jump in front of the rest on the other exchanges. For the trader it looks like large…

The HFT can't just know that you're going to place a market order, and then jump in front of all of the other limit orders that you're going to match with, without offering a better price than the other limit orders.

The only way that could work is if the lowest price you can buy on exchange A is $100, and the HFT knows that you're about to submit a market order, so he buys up the $100 orders until the best price is $101, and then he lists what he bought for sale at $100.99, which your market order matches against. OK, in theory this works.

To avoid this, you can just submit a limit order at $100 instead of a market order. You should always use limit orders for exactly this reason, anyway: even in the absence of foul play, the order you're trying to match against might get matched by someone else in the mean time and you could get a worse price than you expect.

Re: U.S. regulators approve the Long-Term Stock Exchange

#133

Post by eries »

adventured wrote: post #58
miohtama wrote: post #11

Earlier quoted context omitted.

What is a flurry startup and what is a mature company is relative. For example, Amazon originally IPO'ed in 1999 after raising only 10M USD. Especially since the last financial crisis over regulation has hindered SMEs access to the public markets. Being a public company means that you can often raise money on better terms. If only large enterprises can access good money, then SMEs and indirectly innovation is hurt. E…

> For example, Amazon originally IPO'ed in 1999 after raising only 10M USD. Small correction, Amazon's IPO was in May 1997. The $10m in venture capital is correct though ($2m common, $8.2m preferred). They of course had a relatively small business, which matches with the $10m in VC and times. $15.7m in sales for fiscal 1996. Their sales ramp is impressive considering the Web at the time: $875k in 1Q96, $2.2m in 2Q96,…

I cite this fact all the time when talking to people about how capital markets have changed dramatically. But even I find it hard to remember the actual numbers. They are so mind boggling by modern standards. It wasn’t that long ago!

Re: U.S. regulators approve the Long-Term Stock Exchange

#134

Post by crediblewitness »

eries wrote: post #128

Hey everyone, Eric Ries here, founder and CEO of LTSE (and also you may remember me from such roles as the Lean Startup guy). Day one of approval has been kind of exhausting with all the attention but I wanted to stop by this thread and say hello. Have questions? Happy to answer as best I can. Keep in mind that this is a highly-regulated startup so we are sometimes limited in what we can say publicly. I’ll do my best…

Have you seen any interest from companies who are already traded on existing stock exchanges from delisting there and being listed on the LTSE?

Re: U.S. regulators approve the Long-Term Stock Exchange

#135

Post by eries »

nerdponx wrote: post #52

The new exchange would have extra rules designed to encourage companies to focus on long-term innovation rather than the grind of quarterly earnings reports by asking companies to limit executive bonuses that award short-term accomplishments. And what are those rules? Nowhere in the article does it actually say what this actually is.

Stay tuned. This initial approval is for the base set of listing standards that are similar to other exchanges (that’s just how the process works). Over time we will add more, but we can’t share the details until we get further in the regulatory process.

Re: U.S. regulators approve the Long-Term Stock Exchange

#136

Post by eries »

maxander wrote: post #60
reasonablemann wrote: post #59

I think it's worth it to allow this but I fail to see it's true relevance. If companies don't innovate sufficiently for the long term they will die to other companies that do. Hence the market takes care of itself.

Shareholders aren’t incentivized to act in the company’s long-term interest; only to maximize apparent growth for as long as they hold the company’s shares. This leads to companies making shortsighted moves that aren’t in their long-term interest, due to shareholder influence.

It’s astonishing to me how clear this is in the research literature: https://corpgov.law.harvard.edu/2019/04/30/short-term-invest...

Re: U.S. regulators approve the Long-Term Stock Exchange

#138

Post by eries »

MandieD wrote: post #127
hellllllllooo wrote: post #24

I don't really see how the rules mentioned will change things that much. > asking companies to limit executive bonuses that award short-term accomplishments. Why would I care as an investor? I still want the stock to go up quickly. Executives own stock and without a cash bonus wouldn't this incentive trying to get quick increases in stock value. > more disclosure to investors about meeting key milestones and plans, a…

“Why would I care as an investor? I still want the stock to go up quickly.” That is not what investors want; that’s what speculators want. I am saving for retirement in about 15-20 years; I want my investments to appreciate a reasonable amount over that period and show a stable pattern of generating good returns - I don’t really care what their prices are like in the next few months, except for that if they’re down i…

There used to be a time in the distant past when growth companies were financed with ordinary people’s retirement savings for just this reason.

Re: U.S. regulators approve the Long-Term Stock Exchange

#139

Post by matt4077 »

memmcgee wrote: post #96
conanbatt wrote: post #86

I think there is big potential value in a new exchange that optimizes for cheap IPO'ing rules. Something between Nasdaq and Wefunder. I'm not persuaded by some of the ideas they have (like adding diversity to their governing board, seems designed to be exclusive to tech-startups that already have a bias toward that "value"). But if only by competition they make listing cheaper and easier it could have a big impact.

>I'm not persuaded by some of the ideas they have (like adding diversity to their governing board, seems designed to be exclusive to tech-startups that already have a bias toward that "value"). What on Earth does this mean?

It means somebody is feeling so insecure about their masculinity they can read about a new stock exchange doing about a hundred things differently than the status quo, and hone in on what strikes me as the single most benign initiative to complain about.

Re: U.S. regulators approve the Long-Term Stock Exchange

#140

Post by eries »

im3w1l wrote: post #87
hellllllllooo wrote: post #24

I don't really see how the rules mentioned will change things that much. > asking companies to limit executive bonuses that award short-term accomplishments. Why would I care as an investor? I still want the stock to go up quickly. Executives own stock and without a cash bonus wouldn't this incentive trying to get quick increases in stock value. > more disclosure to investors about meeting key milestones and plans, a…

People worry that execs game the metrics investors use to evaluate stock. To give an example close to home, imagine if tech companies were evaluated by how many lines of code they produce per quarter. Now people are scared that execs will tell people to just write a bunch of whatever. Making the company look good on paper (short term stock gains) but actually worse (perform worse in the long term as those lines don't…

https://hbr.org/2018/02/study-when-ceos-equity-is-about-to-v...
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