Maybe. Class A shares should be untradable for 5 years.
Will the Long-Term Stock Exchange Make a Difference?
51–54 of 54 posts
Re: Will the Long-Term Stock Exchange Make a Difference?
#52The prevailing narrative on this topic is "greedy investors only care about short-term profits". The spin is that visionary CEOs try to build long-term growth and innovation, but they're continuously stymied by Wall Street vultures. However the empirical evidence tells a very different story. Corporate managers have a demonstrated tendency towards wasteful ego-stroking empire building when not properly monitored. Thi…
I don't think it's a transparency issue. It's the conflicting goals that come from different investing timeframes.
I'm buy-and-holding for retirement. I want my shares to peak in 2040. The next guy churns his portfolio every few months and wants prices to peak in November.
Even if you communicate your vision and goals well, any type of long-term vision is saying to the short-term investors "we're going to give you smaller dividends and lower numbers for future promise." So the short-term investor can either hope that the communication is solid and long-term buyers are engaged by that messaging enough to keep the price high, or they can lean on boards to prioritize stuff like dividends and buybacks that provide a more direct boost. We can definitely see the latter approach in play.
I worry that in pursuit of pricing efficiency, we've started underprice the future value of some business structures. The decline of conglomerates fits that sort of fear. You can shard a company like Honeywell/GE/Hyundai/Sony/Hitachi into 200 individually priced and tracked units, but then you lose the difficult-to-quantify magic of "predictable money-making businesses that can provide the financial resources and stability to support long-term bets and moon-shot R&D". I would be unsurprised to see this attitude in more monolithic firms too-- being open with your figures to investors will lead to pressures against anything that's not identifiable as a very low risk play with obvious payout.
Re: Will the Long-Term Stock Exchange Make a Difference?
#53Earlier quoted context omitted.
If you object to the Amazon example because the CEO was also the founder, there are many other examples of extremely long-term focused companies where that isn't true. A really good example is Uber. Honestly, Uber is probably far too long-term focused and it'd be better if Wall St punished them more. It's pretty hard to accuse Wall St of being short-term focused on that one. That said, I totally agree with you that e…
Uber has long term aspirations, but it is barely a tween on the scale of long-term companies. It's still unproven in the long term to serve as a good example.
Uber is a good example in that the $54B+ valuation by Wall Street is in spite of the company's enormous short term losses.
Whether or not Wall St is right about Uber's future prospects, I think it's a pretty clear (non-Amazon) example of them ignoring the short-term and looking at the long-term potential. Frankly, they're probably overestimating the future opportunity of Uber, at least in my opinion.
Wall St is not the only-focused-on-the-short-term boogie man that some people would make you think. It's a very convenient excuse for some (typically poorly performing) CEO's, but it really isn't the case.
Re: Will the Long-Term Stock Exchange Make a Difference?
#54Earlier quoted context omitted.
i.e. there is no exchange that offers tenure voting, and it's not clear that there ever will be one.
Tenured voting is already legal on NYSE and NASDAQ ( https://corpgov.law.harvard.edu/2016/03/07/tenure-voting-and... ): it simply requires the company to choose to adopt it and figure out how they would administer it. Right now, tech companies are going with dual-class instead, which only entrenches the founders rather than all long-term investors and is trivial to implement.
This is just not true, at least in the sense that the LTSE is trying to use the term 'tenure voting'.
Right now, every share of a particular security is equally fungible. When Person A sells security X to Person B, the security does not change. Dual class shares are a way to hack around accomplishing something similar to tenure voting, but that hack is that they issue two different types of securities (which, of note, companies have been issuing many types of securities for a long time), but for that security to trade on a listed exchange, it cannot be selectively prejudicial about who owns it. It's the same security with the same rights.