4 ms·

How is this a perfect free market reaction? It's explicitly a reaction not by market participants, but by the relatively minor players who make up part of the r

How is this a perfect free market reaction? It's explicitly a reaction not by market participants, but by the relatively minor players who make up part of the rules of the game. The "free market reaction" is that if these capital structures suck, active investors don't buy them or short them, and the stock price goes down. That is, if shareholder control was actually valuable, it'd command enough of a premium to discourage SNAP's behavior.

macspoofing 9y ago
>How is this a perfect free market reaction? Because it's a private organization making a free choice, a choice which you can ignore.
- noobermin 9y ago
  When is "free market" synonymous with private choices? This sounds like a bad conflation.
  - jacalata 9y ago
    It's not synonymous but a free market is built on the ability for private parties to make their own choices.
    - acjohnson55 9y ago
      And a whole bunch of other criteria. I the term the OP was looking for was just "market".
  - macspoofing 9y ago
    Since always? Your definition of 'free market' is perfect competition[1]? [1]https://en.wikipedia.org/wiki/Perfect_competition https://en.wikipedia.org/wiki/Perfect_competition
pishpash 9y ago
Why don't you just buy SNAP directly? S&P 500 is just an index, like a phonebook. They can list or not list whatever they want, and ETF's can follow or not follow those indexes.
- HappyTypist 9y ago
  They don't arbitrary choose however. They have published and objective criterias, and they're not singling out SNAP but it is literally the first big stock without ANY voting rights so theyve decided to draw the line now.
hueving 9y ago
SNAP doesn't need to be in the S&P 500. That's not the market, that's just a list of stocks. One of the value propositions of these lists is some sort of vetting, so it's their prerogative to drop stocks that don't meet their requirements.
- awkwarddaturtle 9y ago
  It's not just a list of stocks. It's also a basis for the purchasing of stocks by ETFs, Mutual Funds, etc. Being in the S&P provides a lot of "depth" to a company's stock. I agree that a company like SNAP doesn't need to be in the S&P since it's pretty much a tech gamble. It's either gonna grow into a juggernaut or it's gonna fizzle. We'll find out soon enough.
  - CydeWeys 9y ago
    I invest almost exclusively in index-tracking funds and ETFs. I don't want my money going into shares of stocks that confer no voting rights at all. That's not really traditional stock ownership at that point, as the corporation is no longer ultimately run by or held accountable to investors. It's something else.
    - almost_usual 9y ago
      Good index funds are much more diverse than the S&P 500. The S&P 500 is mostly composed of large-cap companies. The beauty of index funds is that they're so diverse if you had a SNAP in it that plummeted it'd barely impact your portfolio. This is the whole point of index fund diversification.
    - awkwarddaturtle 9y ago
      > I invest almost exclusively in index-tracking funds and ETFs. I don't want my money going into shares of stocks that confer no voting rights at all. Okay. I wouldn't either. What does your comment have to do with what I wrote? > That's not really traditional stock ownership at that point, as the corporation is no longer ultimately run by or held accountable to investors. It's something else. I agree. Once again, your comment has nothing to do with what I wrote. Did you reply to the wrong comment by any chance? I'm just pointing out why S&P index is important and why it is more than a list?
mcv 9y ago
Maybe these structures are themselves a free market reaction to the misbehaviour of hedge funds and hostile takeovers messing with how a company is run. They only want investors who trust how the company is run. I admit I have very mixed feelings about these kind of structures. On the one hand it feels like cheating, on the other hand I totally get why this is necessary to protect the company. Still, it basically means that investors don't really own part of the company anymore; they just have a right to its dividends, but need blind trust in how the real owners of the company decide to run it. It enables more autocratically run companies without any accountability to shareholders, because those aren't real shares anymore.

macspoofing 9y ago

>How is this a perfect free market reaction? Because it's a private organization making a free choice, a choice which you can ignore.

noobermin 9y ago
When is "free market" synonymous with private choices? This sounds like a bad conflation.
- jacalata 9y ago
  It's not synonymous but a free market is built on the ability for private parties to make their own choices.
  - acjohnson55 9y ago
    And a whole bunch of other criteria. I the term the OP was looking for was just "market".
- macspoofing 9y ago
  Since always? Your definition of 'free market' is perfect competition[1]? [1]https://en.wikipedia.org/wiki/Perfect_competition https://en.wikipedia.org/wiki/Perfect_competition

pishpash 9y ago

Why don't you just buy SNAP directly? S&P 500 is just an index, like a phonebook. They can list or not list whatever they want, and ETF's can follow or not follow those indexes.

HappyTypist 9y ago
They don't arbitrary choose however. They have published and objective criterias, and they're not singling out SNAP but it is literally the first big stock without ANY voting rights so theyve decided to draw the line now.

hueving 9y ago

SNAP doesn't need to be in the S&P 500. That's not the market, that's just a list of stocks. One of the value propositions of these lists is some sort of vetting, so it's their prerogative to drop stocks that don't meet their requirements.

awkwarddaturtle 9y ago
It's not just a list of stocks. It's also a basis for the purchasing of stocks by ETFs, Mutual Funds, etc. Being in the S&P provides a lot of "depth" to a company's stock. I agree that a company like SNAP doesn't need to be in the S&P since it's pretty much a tech gamble. It's either gonna grow into a juggernaut or it's gonna fizzle. We'll find out soon enough.
- CydeWeys 9y ago
  I invest almost exclusively in index-tracking funds and ETFs. I don't want my money going into shares of stocks that confer no voting rights at all. That's not really traditional stock ownership at that point, as the corporation is no longer ultimately run by or held accountable to investors. It's something else.
  - almost_usual 9y ago
    Good index funds are much more diverse than the S&P 500. The S&P 500 is mostly composed of large-cap companies. The beauty of index funds is that they're so diverse if you had a SNAP in it that plummeted it'd barely impact your portfolio. This is the whole point of index fund diversification.
  - awkwarddaturtle 9y ago
    > I invest almost exclusively in index-tracking funds and ETFs. I don't want my money going into shares of stocks that confer no voting rights at all. Okay. I wouldn't either. What does your comment have to do with what I wrote? > That's not really traditional stock ownership at that point, as the corporation is no longer ultimately run by or held accountable to investors. It's something else. I agree. Once again, your comment has nothing to do with what I wrote. Did you reply to the wrong comment by any chance? I'm just pointing out why S&P index is important and why it is more than a list?

mcv 9y ago

Maybe these structures are themselves a free market reaction to the misbehaviour of hedge funds and hostile takeovers messing with how a company is run. They only want investors who trust how the company is run. I admit I have very mixed feelings about these kind of structures. On the one hand it feels like cheating, on the other hand I totally get why this is necessary to protect the company. Still, it basically means that investors don't really own part of the company anymore; they just have a right to its dividends, but need blind trust in how the real owners of the company decide to run it. It enables more autocratically run companies without any accountability to shareholders, because those aren't real shares anymore.