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absorb all the unicorns at their current prices As to the second point, the "high prices" are in the private market and yes "that's what people (in private mar

absorb all the unicorns at their current prices As to the second point, the "high prices" are in the private market and yes "that's what people (in private market) are willing to pay". But that doesn't imply it would be the same in public market.

paulpauper 11y ago
The EMH says it shouldn't matter too much. The transition from private to public adds more liquidity for traders, but in accordance to the EMH it should work both ways (50% chance of buying or selling). Those who wanted to buy but couldn't will do so now that the shares are public, and some will sell. There should be no expected edge shorting companies that go public, after taking into account borrowing costs and other factors. The evidence suggests such a strategy would probably break-even, in accordance with the EMH. https://qph.is.quoracdn.net/main-qimg-ef1c7da1ddf19c2c7c7d90c689cd5c80?convert_to_webp=true https://qph.is.quoracdn.net/main-qimg-ef1c7da1ddf19c2c7c7d90...
- someguydave 11y ago
  Yes but how efficient is the market for private equity? It seems like all kinds of information in the private equity market is potentially hidden from bidders, including past prices.
  - paulpauper 11y ago
    A VC fund averages slightly better than the market, suggesting possible inefficiencies
    - theseatoms 11y ago
      But VC funds take on significantly more risk than a broad market, long-only index fund. So VCs need to yield a proportionately higher return, if we're comparing apples to apples. https://en.wikipedia.org/wiki/Sharpe_ratio https://en.wikipedia.org/wiki/Sharpe_ratio
- deleted 11y ago
  [deleted]
- whatok 11y ago
  Liquidity absolutely has a massive impact on prices. Less liquidity = less price discovery = greater volatility.
JonFish85 11y ago
"that's what people (in private market) are willing to pay" And on top of that, investors paying those amounts are also able to influence their investment in ways they couldn't do as easily in public markets, whether it's buying a board seat, setting up multipliers, dilution protections and last in / first out agreements (and I'm sure others that I'm not even aware of).

paulpauper 11y ago

The EMH says it shouldn't matter too much. The transition from private to public adds more liquidity for traders, but in accordance to the EMH it should work both ways (50% chance of buying or selling). Those who wanted to buy but couldn't will do so now that the shares are public, and some will sell. There should be no expected edge shorting companies that go public, after taking into account borrowing costs and other factors. The evidence suggests such a strategy would probably break-even, in accordance with the EMH. https://qph.is.quoracdn.net/main-qimg-ef1c7da1ddf19c2c7c7d90c689cd5c80?convert_to_webp=true https://qph.is.quoracdn.net/main-qimg-ef1c7da1ddf19c2c7c7d90...

someguydave 11y ago
Yes but how efficient is the market for private equity? It seems like all kinds of information in the private equity market is potentially hidden from bidders, including past prices.
- paulpauper 11y ago
  A VC fund averages slightly better than the market, suggesting possible inefficiencies
  - theseatoms 11y ago
    But VC funds take on significantly more risk than a broad market, long-only index fund. So VCs need to yield a proportionately higher return, if we're comparing apples to apples. https://en.wikipedia.org/wiki/Sharpe_ratio https://en.wikipedia.org/wiki/Sharpe_ratio
deleted 11y ago
[deleted]
whatok 11y ago
Liquidity absolutely has a massive impact on prices. Less liquidity = less price discovery = greater volatility.

JonFish85 11y ago

"that's what people (in private market) are willing to pay" And on top of that, investors paying those amounts are also able to influence their investment in ways they couldn't do as easily in public markets, whether it's buying a board seat, setting up multipliers, dilution protections and last in / first out agreements (and I'm sure others that I'm not even aware of).