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You're not limited to stock. You can purchase options or futures, or play around with foreign exchanges. IPOs show up more rarely because it's SUPPOSED to be ha

by BFatts 9y ago

You're not limited to stock. You can purchase options or futures, or play around with foreign exchanges. IPOs show up more rarely because it's SUPPOSED to be hard to start a new business. You can approach companies to try and buy into their model by investing your cash - nothing is stopping you. As for VC companies controlling the cash, that's not the whole picture. Being dependent on "free cash" from VC's is a pretty poor way of conducting business. It isn't all about the money - it's the product. VCs don't want to invest in junk just because one person is ecstatic about their idea. They really do want more sure things. A TON of VCs were hurt back in the early 2000's because companies were producing NADA and IPO-ing all the time. A lot of trust was lost.

dv_dt 9y ago
My point is once the stock on the exchange, all the churn, the purchases and sales, the futures and options have an increasingly tenuous link with encouraging capital to select for better fundamental productivity. Worse, by the time a company is publicly traded, you're really often just in the 'execution' phase of expanding an already established process. This isn't terrible, it's useful - but my main concern is capitalization of fundamental improvements in our economy at an earlier stage than a stock is 'bottlenecked' at the moment and so the financial market has a limited set of options of truly productive places to apply excess capital. Part of that is large companies (with a handful of exceptions) perform optimization focused on accounting measurements and predictions to maximize their existing margins. This makes perfect logical measurable sense, except that over multiple decades of refined MBA practices, it makes almost all them good some local optimization, and increasingly bad at new ventures(or fundamentally changing their approach to existing ventures). Then to break out of that local optimization, some increased investment is required that large companies are punished for if/when their profit margin drops. So local optimizations are explored to a endpoint, and capital starts chasing higher returns - we get rentier behivior, or capital flows into bubble assets that pop up or get chased around the world in various categories - all while produtivity and growth slowly flatlines... or at least misses its potential. This has been recognized for a while w.r.t large companies, and so the generally accepted approach is for many of them to acquire new companies to get new capability. So we get to VCs. They don't want to invest in junk, but when VCs apply quantitative filters to because they want a sure thing investment - but moving the same quantitive model to uncertain ventures just moves that some of same 'large company' problem to an earlier stage. I'm not saying to get rid of VCs, they perform a reasonable function now, but something feels off. I'll leave off a whole discussion of where new companies can come from outside of VCs, but there are some factors holding that back (and others helping), but in general it think that's in decline and that our larger markets depended on that creation more than they realize. So to me, it feels like the overall financial system is missing opportunities - and that part is possibly hinted at in data, at least at the gross productivity growth falloff of the economy.

by BFatts 9y ago

dv_dt 9y ago

My point is once the stock on the exchange, all the churn, the purchases and sales, the futures and options have an increasingly tenuous link with encouraging capital to select for better fundamental productivity. Worse, by the time a company is publicly traded, you're really often just in the 'execution' phase of expanding an already established process. This isn't terrible, it's useful - but my main concern is capitalization of fundamental improvements in our economy at an earlier stage than a stock is 'bottlenecked' at the moment and so the financial market has a limited set of options of truly productive places to apply excess capital. Part of that is large companies (with a handful of exceptions) perform optimization focused on accounting measurements and predictions to maximize their existing margins. This makes perfect logical measurable sense, except that over multiple decades of refined MBA practices, it makes almost all them good some local optimization, and increasingly bad at new ventures(or fundamentally changing their approach to existing ventures). Then to break out of that local optimization, some increased investment is required that large companies are punished for if/when their profit margin drops. So local optimizations are explored to a endpoint, and capital starts chasing higher returns - we get rentier behivior, or capital flows into bubble assets that pop up or get chased around the world in various categories - all while produtivity and growth slowly flatlines... or at least misses its potential. This has been recognized for a while w.r.t large companies, and so the generally accepted approach is for many of them to acquire new companies to get new capability. So we get to VCs. They don't want to invest in junk, but when VCs apply quantitative filters to because they want a sure thing investment - but moving the same quantitive model to uncertain ventures just moves that some of same 'large company' problem to an earlier stage. I'm not saying to get rid of VCs, they perform a reasonable function now, but something feels off. I'll leave off a whole discussion of where new companies can come from outside of VCs, but there are some factors holding that back (and others helping), but in general it think that's in decline and that our larger markets depended on that creation more than they realize. So to me, it feels like the overall financial system is missing opportunities - and that part is possibly hinted at in data, at least at the gross productivity growth falloff of the economy.