At this point I think the problem is that the economy is debt based and depends on stocks going up anyway.
The Long-Term Stock Exchange Is Worth a Shot
71–80 of 135 posts
Re: The Long-Term Stock Exchange Is Worth a Shot
#72This is so contrived. Why not have different classes selling in the same market? Something like DVR or differential voting rights. Depending on the market and need prices of DVR might be less or more.
Re: The Long-Term Stock Exchange Is Worth a Shot
#73Earlier quoted context omitted.
> can I short on the normal exchange and buy on the long term exchange for some free voting power that increases over time? Buying voting power on the long-term exchange isn't free, your capital is allocated. You have finite capital. Your cost for each unit of voting power declines perpetually so long as you hold it, it never goes to zero (free). You can view the shorting as paying for your purchase in the long-term…
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.
We'll see more strategies like voting against the company's interest in order to benefit one's other portfolio holdings. You just need enough to tip a split vote (which at least means a large number probably don't believe it is against the company's interest; but if the voter has inside info there wouldn't be much stopping them as it isn't an inside trade..).
Re: The Long-Term Stock Exchange Is Worth a Shot
#74Interesting idea, but seems impractical because it causes very weird incentives: * Can a company exist in both the "normal" exchange and the "long term" exchange at the same time? If so, can I short on the normal exchange and buy on the long term exchange for some free voting power that increases over time? * Many (most?) consumer-facing brokerages make a significant portion of their revenue by lending out their cust…
> Can a company exist in both the "normal" exchange and the "long term" exchange at the same time? The fact that a company is listed on multiple exchanges doesn't mean it has different sorts of stock for each exchange. This real subject of this article is tenure voting , which is an aspect of the stock (not the exchange). The reason exchanges are mentioned is that exchanges have rules about the sorts of stock they wi…
> This problem is so obvious that it must have been addressed by the people proposing this.
I feel like this sentence could be found on the graves of many a failed startup.
Re: The Long-Term Stock Exchange Is Worth a Shot
#75Regardless of my strategy, one benefit of stocks is liquidity. If something comes up, I can cash out pretty much immediately thought I may not like the return.
kes th
This proposal sounds like tenure, being in place for a long time entitles me to something. It makes the market more complicated and for no proven benefit. No thanks.
Re: The Long-Term Stock Exchange Is Worth a Shot
#76Earlier 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.
this is reminding me of LLCs holding real estate in California, where the LLC and bought and sold but not the real estate, thereby preserving the low tax basis for prop13 purposes.
Does this really hold up? I don't think so. I remember reading that under the law that an LLC that just holds property for the purpose of subverting re-assessment upon transfer, is not legal (or the reassessment happens when the LLC is sold, no free ride under prop 13). I would also think this doesn't work or every piece of property in California would just be owned by a separate company. If it does work, I'd like to know so I can set up my LLC for my house when I want to sell it. Reducing the property tax by $1000 a month should be worth quite a bit in this low interest environment.
Re: The Long-Term Stock Exchange Is Worth a Shot
#77Earlier quoted context omitted.
>Yes, this strikes me as the obvious problem. The equilibrium is for third party to buy and hold all the tenure-voting stock and then sell stakes in the dividends of the company plus allowing voting by proxy. Basically, the third party becomes an exchange, and all stock effectively has maximal tenure. You've essentially just described the current system. Most shares on NASDAQ and NYSE etc. are technically held by Dep…
> legal fiction that the shares are "owned" by Joe Schmoe, even though all he really has is an attenuated set of contractual rights What is a stock really, if not "a set of contractual rights"?
To oversimplify, property rights are often said to be good against the world, while contract rights are good against specific others.
A share of stock is itself a set of contractual rights, but the record owner has a property right in the share (and often a physical certificate). It doesn't matter if someone takes your share or inadvertently/accidentally sells it to an innocent buyer. It's still yours and you have a better claim to it than any buyer or later holder.
But a beneficial owner of a share held in "street name" has only a contractual right to his shares--essentially a promise from his broker that the broker will have at least [x] shares for him (note this means he does not have a claim to any specific or identifiable shares and his broker surely holds many times more since they'll have many other clients). And on top of that, his broker has an account with DTC that involves a second layer of contractual rights to the stock--essentially a promise from DTC to the broker that DTC will have at least [x] shares for the broker (again not specific or identifiable shares and DTC certainly has many times more shares since DTC holds nearly all shares held in "street name")
If your broker or DTC accidentally or inadvertently disposes of too many shares (and this can happen surprisingly often) you only have recourse against your broker or DTC. The agreements between [you and your broker] and [your broker and DTC] do not bind the new owner of the shares, who has no obligation under those agreements and, as a bona fide buyer + current holder, also has a better claim to the shares than you do.
If that wasn't specific enough, here's a very detailed summary and analysis of the current stock ownership structure and mechanics:
http://scholarship.law.upenn.edu/cgi/viewcontent.cgi?article...
Re: The Long-Term Stock Exchange Is Worth a Shot
#78Earlier quoted context omitted.
>Yes, this strikes me as the obvious problem. The equilibrium is for third party to buy and hold all the tenure-voting stock and then sell stakes in the dividends of the company plus allowing voting by proxy. Basically, the third party becomes an exchange, and all stock effectively has maximal tenure. You've essentially just described the current system. Most shares on NASDAQ and NYSE etc. are technically held by Dep…
> 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, absolutely. That same financial incentive already exists in all sorts of variations. 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.
For an example, look at how long and complicated the NYSE rules are, mostly involving member organizations like brokers (click on "Operation of Member Organizations" or any of the other subheadings at the link below and then see, for example, rule 402):
> .30 Securities Callable in Part.—Member organizations which have in their possession or under their control bonds or preferred stocks of issues which are callable in part, whether specifically set aside or otherwise, shall identify each such bond or preferred stock so that their records shall clearly show for whose account it is held, except in the case of [two limited exceptions]
Re: The Long-Term Stock Exchange Is Worth a Shot
#79I want a reddit (or hackernews) with this style voting. The longer you've been a member, the more your vote counts.
There would probably be unintended consequences galore but it would interesting to see if it helped preserve culture and avoid the "it was better in the early days" syndrome.
Re: The Long-Term Stock Exchange Is Worth a Shot
#80Earlier quoted context omitted.
>Yes, this strikes me as the obvious problem. The equilibrium is for third party to buy and hold all the tenure-voting stock and then sell stakes in the dividends of the company plus allowing voting by proxy. Basically, the third party becomes an exchange, and all stock effectively has maximal tenure. You've essentially just described the current system. Most shares on NASDAQ and NYSE etc. are technically held by Dep…
> legal fiction that the shares are "owned" by Joe Schmoe, even though all he really has is an attenuated set of contractual rights What is a stock really, if not "a set of contractual rights"?
The key word is "attenuated". When you have in a drawer the stock certificate issued by the company the situation is much simpler.