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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

#81

Post by lostboys67 »

hobbyjogger wrote: post #50
jessriedel wrote: post #6

Earlier quoted context omitted.

> 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…

>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…

Interesting in the UK you can directly own the shares slightly more expensive though when held by a third party (Td direct) I had no problem in getting a voting card from them (at no cost)

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

#82

Post by Iv »

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 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. This was a confession that they knew that the high frequency changes is just noise and that the signal has a lower time resolution of about a day.

The prospects of future profits do not change every nanosecond.

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

#83

Post by Yizahi »

timthelion wrote: post #16

This article misses the reason why short term investors are potentially harmfull. The author writes: "One basic and important implication of this theory is that, if you hold a share of stock for a minute, you will want the company to increase its long-term earnings power during that minute. If, during your minute of ownership, the company announces "we have sold all our factories and ruined our productive capacity, b…

Exactly this. I'm observing how a midsized company shares fluctuate completely unrelated to the progress of our development efforts and actual relations and sales to customers. Product A was frozen and discarded after 2 year intense dev cycle (a failure), product B is not faring well in the competition, but we announced product C that may or may not succeed in 1+ years on a major tech show - shares go up. Next year product D is succeeding immensely, record contracts are signed with biggest customers in the world, product is ahead of competition - shares are down, because nobody knows.

tl;dr - PR is everything, often shadowing actual hw or sw "stuff" people make, and HFT capitalizes on this.

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

#84

Post by [deleted] »

danmaz74 wrote: post #29
grondilu wrote: post #22

> Anyway here's a story about the Long-Term Stock Exchange, which is a new planned stock exchange backed by Silicon Valley venture capitalist types that will have "tenure voting," in which shareholders who hold their shares for a long time will get more votes. This has been discussed already on HN, and I believe it's a bad idea. All that would do would be to create two kinds of shares : the normal ones and those with…

If I got this correctly, when you sell your shares with high voting power, they lose their high voting power.

[deleted]

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

#85

Post by danmaz74 »

grondilu wrote: post #33
danmaz74 wrote: post #29

Earlier quoted context omitted.

If I got this correctly, when you sell your shares with high voting power, they lose their high voting power.

Then you'd just create an incentive to sell the share in dark markets. You'd officially still be the owner of the share, but in secret you would have sold your voting right by agreeing with someone to vote on command in exchange for money. As is said in the 1981 movie "rollover", capitalism is like a force of nature : you can try to fight it, but in the end it always win[1] And even if somehow you succeed, you would…

Are those dark markets contracts enforceable?

By the way, this is nothing like communism, not even close. This is a perfectly market oriented solution, if you don't like the idea, don't buy this kind of shares, nobody forces you to do so. If the model will prove good for companies and their investors, it will prosper, otherwise, it won't.

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

#86

Post by iofiiiiiiiii »

hobbyjogger wrote: post #50
jessriedel wrote: post #6

Earlier quoted context omitted.

> 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…

>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…

That's very interesting! Is it possible to buy some stock "for real" and actually own it alongside others who use the DTC system? What are the reasons for this strange system existing?

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

#87

Post by TuringNYC »

Yizahi wrote: post #83
timthelion wrote: post #16

This article misses the reason why short term investors are potentially harmfull. The author writes: "One basic and important implication of this theory is that, if you hold a share of stock for a minute, you will want the company to increase its long-term earnings power during that minute. If, during your minute of ownership, the company announces "we have sold all our factories and ruined our productive capacity, b…

Exactly this. I'm observing how a midsized company shares fluctuate completely unrelated to the progress of our development efforts and actual relations and sales to customers. Product A was frozen and discarded after 2 year intense dev cycle (a failure), product B is not faring well in the competition, but we announced product C that may or may not succeed in 1+ years on a major tech show - shares go up. Next year p…

You have a good point but remember that there are other factors that affect stock price completely external to the company -- the biggest one is interest rates.

Also, external happennings in other companies such as competitors, purchasers, suppliers have an impact on your company. So those should technically feed a model some factors (and in fact they do at hedge funds.)

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

#88

Post by TuringNYC »

WalterBright wrote: post #63
Someone1234 wrote: post #4

That sounds very interesting conceptually. Businesses have been moving further and further into short-termism; with the next quarter being the most important metric. This is partly due to investors also being short-term, and voting on the board who will bring the most value in the shortest period. I'd be interested in taking part in a Long-Term stock exchange, even if it is an experiment at this point.

> Businesses have been moving further and further into short-termism; with the next quarter being the most important metric. That's the conventional wisdom, I've heard it my whole life, and I see no evidence of it. AMZN, MSFT, etc. I've known CEOs who believed it, and manipulated the books to make the short term look better at the expense of the long term. Investors weren't fooled and the stocks would tank.

AMZN ist the stand-out example, but AMZN, FB, GOOG are exceptions. Think back to 2006/2007 when PE and activist investors would take board seats and force companies to over-lever and do stock buy-backs while stocks were all-time high. How many companies can survive short-term incented PE or activist investors?

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

#89

Post by RhysU »

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.

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

#90

Post by HolyLampshade »

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.

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 provide pricing/quoting updates).

That said, I like the idea of a slower market, but, much like the debate over Maker/Taker, it will take an entire industry shift and can't be done on a single venue.

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