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The Long-Term Stock Exchange Opens for Business

blog.ltse.com

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Re: The Long-Term Stock Exchange Opens for Business

#551

Post by vlovich123 »

nine_k wrote: post #547
vlovich123 wrote: post #514

Earlier quoted context omitted.

Ignoring the SEC for a moment, I don’t follow your reasoning. Why couldn’t buying shares require you to sign a contract that you’re not going to engage in various activities such as shorting? That would preempt any private arrangement you attempt to make. You of course could make an illicit secret agreement but you’d still be breaking and invalidating the contract you bought your shares under exposing yourself to var…

How would you detect that, though?

Exercise to be left to the reader. How is collusion and conspiracy detected now?

Re: The Long-Term Stock Exchange Opens for Business

#552

Post by WalterBright »

bumby wrote: post #545
WalterBright wrote: post #540

Earlier quoted context omitted.

1 second trades are more an arbitrage thing, not a short-term vs long-term thing. I don't believe quarterly results have any particular influence over high frequency trading, other than in the minutes after the earnings are announced. Arbitrage is like pouring water into the bathtub. The water will slosh around, eventually finding its lowest energy level, until the next pouring event. Arbitrage is the pull of gravity…

> See the CEO anecdote I posted upthread. I think there may be some survivorship bias in your thought process. As an example, Enron displayed some massive short-term bias when it had a market cap more than 10x that of Apple. Sure, the market eventually corrected (and wiped out a lot of investors along with it), but pointing to current thriving large cap stocks as evidence of the market only rewarding long term thinki…

Enron was actively engaged in accounting fraud, which is a crime and not merely short-term thinking. Once word got out that the company had no actual value, its stock went literally to $0.

But consider the S&P 500. It has its ups and downs, but with an upward bias that has lasted since, well, long before I was born. If the market in general consists of Enrons defrauding their investors, or companies self-destructing by taking only a short term view, how can this upward bias be explained?

If you really believe the market consists of short-term thinking, you can make a fortune shorting those over-valued stocks. Can't say I wish you success doing that, as I am long.

Re: The Long-Term Stock Exchange Opens for Business

#553

Post by WalterBright »

bumby wrote: post #544
WalterBright wrote: post #540

Earlier quoted context omitted.

1 second trades are more an arbitrage thing, not a short-term vs long-term thing. I don't believe quarterly results have any particular influence over high frequency trading, other than in the minutes after the earnings are announced. Arbitrage is like pouring water into the bathtub. The water will slosh around, eventually finding its lowest energy level, until the next pouring event. Arbitrage is the pull of gravity…

I concede my point on HFT, you make good points about it being more about arbitrage. > they aren't fooling anyone I disagree on this. Maybe they don’t fool sophisticated investors that make up 80% of market money but I’ve met plenty of small investors who are duped by this very type of thing.

It's hard to imagine successfully duping investors quarter after quarter, year after year, decade after decade with ever more fanciful quarterly reports.

Re: The Long-Term Stock Exchange Opens for Business

#554

Post by webmaven »

eries wrote: post #248
baccredited wrote: post #236

Many private companies are staying private for longer, with an average time from launch to IPO creeping up toward 10 years or more. Most unaccredited investors are missing all of those substantial early gains. Does LTSE have any plans to help speed the path to IPO and let more unaccredited investors participate in early growth and success?

It is my hope that we will be able to reverse this trend by making the experience of being a public company dramatically better. It will take time to see this play out, just as it has taken time for us to get into this mess. But in the long run, it's important that the broad public be allowed to participate in growth investments, and I think the public markets could once again be the best place to enable that to happ…

So, do you anticipate startups being able to IPO on LTSE at some point?

Re: The Long-Term Stock Exchange Opens for Business

#555

Post by bumby »

WalterBright wrote: post #552
bumby wrote: post #545

Earlier quoted context omitted.

> See the CEO anecdote I posted upthread. I think there may be some survivorship bias in your thought process. As an example, Enron displayed some massive short-term bias when it had a market cap more than 10x that of Apple. Sure, the market eventually corrected (and wiped out a lot of investors along with it), but pointing to current thriving large cap stocks as evidence of the market only rewarding long term thinki…

Enron was actively engaged in accounting fraud, which is a crime and not merely short-term thinking. Once word got out that the company had no actual value, its stock went literally to $0. But consider the S&P 500. It has its ups and downs, but with an upward bias that has lasted since, well, long before I was born. If the market in general consists of Enrons defrauding their investors, or companies self-destructing…

Enron inflated their numbers for short term gain. One example is how they claimed VOD revenue that hasn’t yet occurred.

I get the impression you think I’m claiming the market is always short-term biased. As with Enron, I think the market can be biased in the short term while still being accurate long term when those biases are realized and corrected for. As I think Buffet said, in the short term it’s a voting machine but in the long term it’s a weighing machine.

The problem is if you get caught confusing the two. Just ask anyone who planned on retiring around 2008. The difficulty is knowing when you’re being “irrationally exuberant” or not. We humans are awfully good at fooling ourselves.

Same with the S&P. It’s easy to claim it goes up in hindsight... unless you’re needing to cash out on those sideways decades. It’s not claiming a long position that’s hard, it’s timing it correctly to avoid those sideways and down periods that’s difficult.

Re: The Long-Term Stock Exchange Opens for Business

#556

Post by bumby »

WalterBright wrote: post #553
bumby wrote: post #544

Earlier quoted context omitted.

I concede my point on HFT, you make good points about it being more about arbitrage. > they aren't fooling anyone I disagree on this. Maybe they don’t fool sophisticated investors that make up 80% of market money but I’ve met plenty of small investors who are duped by this very type of thing.

It's hard to imagine successfully duping investors quarter after quarter, year after year, decade after decade with ever more fanciful quarterly reports.

Yes, over the long term the market will correct itself. But in the short term many people can lose their shirts over short term gamesmanship

Re: The Long-Term Stock Exchange Opens for Business

#558

Post by nine_k »

vlovich123 wrote: post #551
nine_k wrote: post #547

Earlier quoted context omitted.

How would you detect that, though?

Exercise to be left to the reader. How is collusion and conspiracy detected now?

I suppose, mostly by chance, or by technical mistakes if the perpetrators?

Re: The Long-Term Stock Exchange Opens for Business

#559

Post by mlrtime »

creeble wrote: post #523

There is no need for a long-term stock exchange. If you want to encourage long-term investing, "all you need to do" is change investment taxation. Equities held for less than a minute? 100% tax. A year? 20%, like the US today. Five or ten years? Zero. Boom, HFT gone, and a sudden rise in long-term investing. But the devil's in the details, in this case the length and shape of the curve.

This would discourage market makers form entering the market, increasing spreads and investors would pay more to execute.

Re: The Long-Term Stock Exchange Opens for Business

#560

Post by andrewjl »

nine_k wrote: post #547
vlovich123 wrote: post #514

Earlier quoted context omitted.

Ignoring the SEC for a moment, I don’t follow your reasoning. Why couldn’t buying shares require you to sign a contract that you’re not going to engage in various activities such as shorting? That would preempt any private arrangement you attempt to make. You of course could make an illicit secret agreement but you’d still be breaking and invalidating the contract you bought your shares under exposing yourself to var…

How would you detect that, though?

Presumably by auditing all the prime brokers.
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