16 ms·

Rayton Solar: Legitimate Investment or Scam?

104 points by johncoogan 9y ago

anovikov 9y ago
Hopeless, ridiculous scam from top to bottom! Silicon isn't even a big factor in price of solar cells. It is dirt cheap nowadays, there is less than 1 cent worth of silicon in 1 watt of solar cell (which is worth 22-24 cents nowadays). And that is a small fraction of cost of watt of installed system ($1-$6 depending on type, size, country, and who you ask). That means, for solar industry, that is at best fraction of percent level of improvement. Shameless scam for people who must be so stupid they deserve being scammed.
- xutopia 9y ago
  Some kindhearted people aren't very smart. I'm not sure anyone deserves being scammed aside from the scammers themselves.
ringaroundthetx 9y ago
Its just a liberal contract, and you just have to hope they won't do it the way this article flags. Most crowd sales have unlimited discretionary use of the funds, and that doesn't mean you can't make a profit, especially if you receive something tradable back. This is probably another reason why equity companies (or at least, purchases of their private equity) are going to go the way of the dinosaur, without liberalizing a liquid secondary market, now that there are alternatives available.
- JumpCrisscross 9y ago
  > equity companies (or at least, purchases of their private equity) are going to go the way of the dinosaur Source?
  - ringaroundthetx 9y ago
    This year the source is the collective conscious that sees and uses the alternative ways of raising or transmitting capital, who can tolerate the lack of consumer and investor protections because of the immediate liquidity benefits allowing them to manage risk There is no dissertation on it, at best you'll find some charts showing side by side comparisons of what you get with the antiquated share company - a technology from 1600 AD - with what is available now, and you couple that with the size of the deal flow and extrapolate what can happen next
    - JumpCrisscross 9y ago
      > [investors] can tolerate the lack of consumer and investor protections because of the immediate liquidity benefits allowing them to manage risk Huh, didn't think we'd reach this point this fast.
    - JackFr 9y ago
      > the immediate liquidity benefits allowing them to manage risk Sure, everyone loves liquidity and anyone can manage risk in an orderly two-sided market. If there is 1) no legitimate profit-making endeavor backing your security & 2) no current bid, your security is worth exactly $0. You have faith that we needn't worry about (1) because (2) will never happen. I don't.
- JackFr 9y ago
  Existing securities laws didn't develop in a vacuum - they were a response to real problems in capital markets. Receiving something tradeable presupposes a counter party to trade with. Those likely will be in short supply once you've bought a lemon. A secondary market which eschews many of the practices of the established markets vis a vis investor protections, and relies on information discovery and reputation, eventually will develop so much friction related to those costs as to stop being viable.
  - ringaroundthetx 9y ago
    > Existing securities laws didn't develop in a vacuum - they were a response to real problems in capital markets They were still developed in a vacuum. US securities laws are 90% promulgated by the SEC unilaterally, for quite some time, and even when Congress is involved the SEC still spends years warping the intent and implementation of the law. The SEC's public comment periods are a total farce and their decision is unilateral, doesn't provide more confidence in the markets, hampers interstate commerce, usually increases transaction costs and the cost of capital, and doesn't prevent scams. There are alternatives now.
  - JumpCrisscross 9y ago
    FYI, you're arguing with someone who literally believes investor protections aren't necessary for liquid investments [1]. [1] https://news.ycombinator.com/item?id=15134630 https://news.ycombinator.com/item?id=15134630
    - ringaroundthetx 9y ago
      thats not what that says what people tolerate has nothing to do with my "literal beliefs"
mediocrejoker 9y ago
I'm not qualified to comment on the financial accusations but if accurate they seem quite damning. However I'm not sure I like the way the author of this piece cites usernames from the _comments of the same article_ as experts in the field of solar technology.
- baking 9y ago
  As one of the "experts" quoted I agree, but I'll take it as meaning "from someone who knows a little more than me about the subject."
baking 9y ago
They've been advertising heavily on Facebook. Companies like Alta Devices and 1366 Technologies have been making kerfless photovoltaics for almost ten years now and are up to gen4 and gen3 production lines respectively, and have been selling in quantity to actual customers. Meanwhile, Rayton has made a down payment on a "microwave ion source" beam accelerator from Pheonix Nuclear Labs and has apparently yet to come up with the remainder of the funds to take delivery, so they are still at gen0 (proof-of-concept.)
mchannon 9y ago
As an expert on silicon and solar, the technology is doomed- here's why: •It is totally possible, in terms of the physics, to do what they're proposing. All you have to do is take your ingot or boule of FZ or Cz Silicon, draw a vacuum on it, backfill it with hydrogen, and run your ion implantation head over it. Like a Durandal bomb, the upper surface is relatively undisturbed but a cutting effect occurs beneath the surface. Pop, off comes your perfect and thin wafer. •This idea has been proposed before. •There's nothing fundamentally wrong with a 3 micron thick silicon wafer. It takes some different processing steps to trap the light, but you can still make a decent solar cell out of it. It's not better than a 400 micron wafer in terms of efficiency, but not much worse. Also, by it being so thin, it's flexible and not so darn brittle. That reduces breakage but also makes handling a little more challenging. •The idea fails when you consider the economics. First consider the market you're trying to break into- there's a huge glut of silicon wafer manufacturing capacity in the industry. Silicon manufacture is going gang busters, so it's not a commodity that's expensive to begin with. Solyndra bet on silicon prices staying high and that, more than any other reason, is why they failed. This is the same bet with a different topology. •Bill Nye should perform a little math problem- consider the amount of electricity and hydrogen gas necessary to perform a cleave, 100% efficient, 100% yield, and multiply these quantities by their respective commodity costs. You will end up with a number in excess of the cost of a 500 micron wafer, or perilously close to one. •I did the math five years ago and it made no sense then, when silicon wafers sold for over twice as much. Just because the existing technology is materially wasteful (it definitely is, generating a lot of kerf and going through a lot of expensive wiresaw blades and polishing processes) doesn't mean that it's economically wasteful. It's not too late to pivot- I'm sure he'll have no difficulty raising the money in spite of these shortcomings. I'd be more than happy to steer this company in the right direction, contributing IP that actually delivers on these promises. All it takes is an e-mail.
- api 9y ago
  One more: * Silicon is not a rare material. It's one of the more common elements in Earth's crust. The price is largely in processing and fabrication, meaning it's going to continue to fall like a rock due to economies of scale and optimization.
lgats 9y ago
Here are some important facts from the SEC filing: If the company cannot raise sufficient funds it will not succeed or will require significant additional capital infusions. Rayton Solar is offering Common Stock in the amount of up to $50 million in this offering, but may sell much less. After $7 million is raised, the following $3 million will go to the selling securityholders. Even if the maximum amount is raised, the company is likely to need additional funds in the future in order to grow, and if it cannot raise those funds for whatever reason, including reasons outside the company’s control, such as another significant downturn in the economy, it may not survive. If the company does not sell all of the Common Stock it is offering, it will have to find other sources of funding in order to develop its business. Even if Rayton Solar is successful in selling all of the Common Stock being offered, Rayton Solar’s proposed business will require significant additional capital infusions. Based on its current estimates, Rayton Solar will require at least $35 million to create a 54 megawatt, commonly abbreviated as MW, PV module manufacturing facility. This amount does not include the amount needed to manufacture the PV modules for sale. If planned operating levels are changed, higher operating costs encountered, lower sales revenue received or more time is needed to implement the business plan, more funds than currently anticipated may be required. Furthermore, in order to expand, the company is likely to raise funds again in the future, either by offerings of securities or through borrowing from banks or other sources. The terms of future capital infusions may include covenants that give creditors rights over the financial resources of the company or sales of equity securities that will dilute the holders of the company’s Common Stock. The company has not yet generated any revenues. Rayton Solar has no revenues generated since its inception. There is no assurance that the company will ever be profitable or generate sufficient revenue to pay dividends to the holders of its Common Stock. The company does not believe it will be able to generate revenues without successfully achieving target market sales for the PV module to large scale project developers, large scale retailers and wholesalers, or contractors. If the company cannot raise enough funds in this financing to manufacture and sell PV modules, it will need to successfully sell its solar cells to PV module manufacturers, which will result in less revenue to the company. If that fails, then it will need to license its current and future patents, assuming the company is granted its patents that are currently pending. Rayton Solar is dependent upon the proceeds of this offering for working capital, including for the manufacture of the PV modules. The company is an early stage company. As an early stage company and a company developing a new technology, Rayton Solar may encounter difficulties such as unanticipated problems relating to the development and testing of its product, initial and continuing regulatory compliance, vendor manufacturing costs, production and assembly of its product, and the competitive and regulatory environments in which the company intends to operate. It is uncertain, at this stage of its development, if the company will be able to effectively resolve any such problems, should they occur. If the company cannot resolve an unanticipated problem, it may be forced to modify or abandon its business plan. Operations could be adversely affected by interruptions of production that are beyond the company’s control. The company plans to manufacture its own PV modules. However, if it does not raise enough money, it will sell solar cells needed to produce the PV modules, or license the technology instead. Even if it sells solar cells, the company will rely on vendors to provide silicon ingots and other material. If there are interruptions in the ability of a vendor to provide the necessary amounts of silicon ingots, the company will not be able to meet its production. https://www.sec.gov/Archives/edgar/data/1654124/000114420417002964/v456948_253g2.htm https://www.sec.gov/Archives/edgar/data/1654124/000114420417...
simon_acca 9y ago
The EEVBlog also has a skeptical look on Rayton: https://www.youtube.com/watch?v=IbYtn420QBM https://www.youtube.com/watch?v=IbYtn420QBM
aswanson 9y ago
Very sad to see professors at UCLA acting as directors for this, if its a scam. I'm hoping they're just ignorant of the economics and not committing willful fraud.
- s17n 9y ago
  To be honest, I'd feel better if it was willful fraud.
matt_wulfeck 9y ago
Regarding Bill Nye, this makes me sad. He really was instrumental in making science fun and exciting when I was young. In his post TV life he's become just another political idealogue. Even doing as far as censuring[1] his own TV show when the science contradicts his social justice message. Now it seems he's coming to normal people with an ax to grind. It's hard to see him not profiting from this endeavor. 1. https://thefederalist.com/2017/05/02/bill-nye-censor-transgender-ideology/ https://thefederalist.com/2017/05/02/bill-nye-censor-transge...
- mulmen 9y ago
  He also provided a platform to legitimize creationism by debating it as if it is a valid explanation of how the world came to be. I understand the desire to promote debate but I think he fell into the false balance trap. He did a great deal to advance STEM in the millennial generation which should not be understated but nobody is faultless. He is a great educator but I question if he really knows how best to use his platform.
  - sillysaurus3 9y ago
    You're just as far in the opposite direction, though. When people have strange beliefs, the best way to deal with the situation is usually to talk to them on the same level, as grownups with valid beliefs. Otherwise you change no one's mind. If we dig through your brain, we'd probably turn up a few questionable beliefs of your own. Most people just aren't that transparent.
    - mulmen 9y ago
      I'm not saying we should refuse to debate in all cases. There are not always exactly two sides and just because someone comes up with a crazy idea does not mean we should spend energy arguing with them. Yes, talking and educating people is an important endeavor and one that Bill Nye has proven to be well suited. However, education and debate are not the same thing and it is easy to legitimize dangerous ideas by putting them on an equal footing with proven concepts in the context of a debate. I have all kinda of crazy beliefs, many that I probably can't even identify myself. That doesn't mean I should waste an expert's time with debate.
john_moscow 9y ago
The stock market in general is moving in a strange direction in the past decade. •First the dividends became the thing of the past as the companies argued that stock buybacks are more tax-efficient. The general public accepted it. •Then the earnings per share disappeared and loss per share became standard. The argumentation was that it's better to invest in growth today and figure out profitability "some other day". The public ate it with not much questioning. •Then it was the voting rights' turn to go with IPOs like SNAP. It raised some concerns (like being excluded from the S&P 500), but didn't stop people from investing either. So if the general public keeps on bringing the money in despite the worsening conditions, it makes sense that someone would come up with even a bolder plan for turning this condition into their personal profit. I blame the agency problem [1]. Too many investment decisions these days are made by someone investing someone else's money and their interests could be different from simply maximizing the returns and too many people blindly trust their money to be managed by someone else without fully understanding the underlying processes. 1. http://www.investopedia.com/terms/a/agencyproblem.asp http://www.investopedia.com/terms/a/agencyproblem.asp
- JackFr 9y ago
  I don't think you're completely correct about EPS in the broader market, (but correct in the headline names). The rest I agree with completely. What's surprising to me is that there wasn't some sort of retrenchment after the 2007-8 crisis. I agree with your analysis about the agency problem, but I also see the it as too much money chasing too few assets. Ever desperate for return, money managers will chase anything that has a return, whether it's rational or not.
  - csomar 9y ago
    We are still too early in the bubble cycle. The returns are higher every year but they are linear. Wait until the public comes (free money?) and discover this; and then you get a parabolic market run and a subsequent crash.
- aidenn0 9y ago
  I don't think it's agency; I think it's the fact that non-equity based investments have had terrible returns for a decade now. What are you going to do? Invest in a CD?
SoMisanthrope 9y ago
I know that my Karma is going to get nerfed... but Bill Nye is a nucklehead... and he isn't a scientist. He's a performer, seeking fame, adulation, and cash. Hit the ignore button, I recommend.
brianbreslin 9y ago
Is it legal to make investment advice like this and not be a series 7 (or whatever number) licensed broker/dealer? Is the author a stock broker?
andrewfromx 9y ago
isn't the point then, Rayton is a cry for help from Bill Nye? as in, he wants the world's best experts on silicon and solar to come together and work 24/7 on this problem.
gregpardo 9y ago
Not surprising. Bill Nye is a business man not a scientist.

104 points by johncoogan 9y ago

Hopeless, ridiculous scam from top to bottom! Silicon isn't even a big factor in price of solar cells. It is dirt cheap nowadays, there is less than 1 cent worth of silicon in 1 watt of solar cell (which is worth 22-24 cents nowadays). And that is a small fraction of cost of watt of installed system ($1-$6 depending on type, size, country, and who you ask). That means, for solar industry, that is at best fraction of percent level of improvement. Shameless scam for people who must be so stupid they deserve being scammed.

xutopia 9y ago
Some kindhearted people aren't very smart. I'm not sure anyone deserves being scammed aside from the scammers themselves.

ringaroundthetx 9y ago

Its just a liberal contract, and you just have to hope they won't do it the way this article flags. Most crowd sales have unlimited discretionary use of the funds, and that doesn't mean you can't make a profit, especially if you receive something tradable back. This is probably another reason why equity companies (or at least, purchases of their private equity) are going to go the way of the dinosaur, without liberalizing a liquid secondary market, now that there are alternatives available.

JumpCrisscross 9y ago
> equity companies (or at least, purchases of their private equity) are going to go the way of the dinosaur Source?
- ringaroundthetx 9y ago
  This year the source is the collective conscious that sees and uses the alternative ways of raising or transmitting capital, who can tolerate the lack of consumer and investor protections because of the immediate liquidity benefits allowing them to manage risk There is no dissertation on it, at best you'll find some charts showing side by side comparisons of what you get with the antiquated share company - a technology from 1600 AD - with what is available now, and you couple that with the size of the deal flow and extrapolate what can happen next
  - JumpCrisscross 9y ago
    > [investors] can tolerate the lack of consumer and investor protections because of the immediate liquidity benefits allowing them to manage risk Huh, didn't think we'd reach this point this fast.
  - JackFr 9y ago
    > the immediate liquidity benefits allowing them to manage risk Sure, everyone loves liquidity and anyone can manage risk in an orderly two-sided market. If there is 1) no legitimate profit-making endeavor backing your security & 2) no current bid, your security is worth exactly $0. You have faith that we needn't worry about (1) because (2) will never happen. I don't.
JackFr 9y ago
Existing securities laws didn't develop in a vacuum - they were a response to real problems in capital markets. Receiving something tradeable presupposes a counter party to trade with. Those likely will be in short supply once you've bought a lemon. A secondary market which eschews many of the practices of the established markets vis a vis investor protections, and relies on information discovery and reputation, eventually will develop so much friction related to those costs as to stop being viable.
- ringaroundthetx 9y ago
  > Existing securities laws didn't develop in a vacuum - they were a response to real problems in capital markets They were still developed in a vacuum. US securities laws are 90% promulgated by the SEC unilaterally, for quite some time, and even when Congress is involved the SEC still spends years warping the intent and implementation of the law. The SEC's public comment periods are a total farce and their decision is unilateral, doesn't provide more confidence in the markets, hampers interstate commerce, usually increases transaction costs and the cost of capital, and doesn't prevent scams. There are alternatives now.
- JumpCrisscross 9y ago
  FYI, you're arguing with someone who literally believes investor protections aren't necessary for liquid investments [1]. [1] https://news.ycombinator.com/item?id=15134630 https://news.ycombinator.com/item?id=15134630
  - ringaroundthetx 9y ago
    thats not what that says what people tolerate has nothing to do with my "literal beliefs"

mediocrejoker 9y ago

I'm not qualified to comment on the financial accusations but if accurate they seem quite damning. However I'm not sure I like the way the author of this piece cites usernames from the _comments of the same article_ as experts in the field of solar technology.

baking 9y ago
As one of the "experts" quoted I agree, but I'll take it as meaning "from someone who knows a little more than me about the subject."

baking 9y ago

They've been advertising heavily on Facebook. Companies like Alta Devices and 1366 Technologies have been making kerfless photovoltaics for almost ten years now and are up to gen4 and gen3 production lines respectively, and have been selling in quantity to actual customers. Meanwhile, Rayton has made a down payment on a "microwave ion source" beam accelerator from Pheonix Nuclear Labs and has apparently yet to come up with the remainder of the funds to take delivery, so they are still at gen0 (proof-of-concept.)

mchannon 9y ago

As an expert on silicon and solar, the technology is doomed- here's why: •It is totally possible, in terms of the physics, to do what they're proposing. All you have to do is take your ingot or boule of FZ or Cz Silicon, draw a vacuum on it, backfill it with hydrogen, and run your ion implantation head over it. Like a Durandal bomb, the upper surface is relatively undisturbed but a cutting effect occurs beneath the surface. Pop, off comes your perfect and thin wafer. •This idea has been proposed before. •There's nothing fundamentally wrong with a 3 micron thick silicon wafer. It takes some different processing steps to trap the light, but you can still make a decent solar cell out of it. It's not better than a 400 micron wafer in terms of efficiency, but not much worse. Also, by it being so thin, it's flexible and not so darn brittle. That reduces breakage but also makes handling a little more challenging. •The idea fails when you consider the economics. First consider the market you're trying to break into- there's a huge glut of silicon wafer manufacturing capacity in the industry. Silicon manufacture is going gang busters, so it's not a commodity that's expensive to begin with. Solyndra bet on silicon prices staying high and that, more than any other reason, is why they failed. This is the same bet with a different topology. •Bill Nye should perform a little math problem- consider the amount of electricity and hydrogen gas necessary to perform a cleave, 100% efficient, 100% yield, and multiply these quantities by their respective commodity costs. You will end up with a number in excess of the cost of a 500 micron wafer, or perilously close to one. •I did the math five years ago and it made no sense then, when silicon wafers sold for over twice as much. Just because the existing technology is materially wasteful (it definitely is, generating a lot of kerf and going through a lot of expensive wiresaw blades and polishing processes) doesn't mean that it's economically wasteful. It's not too late to pivot- I'm sure he'll have no difficulty raising the money in spite of these shortcomings. I'd be more than happy to steer this company in the right direction, contributing IP that actually delivers on these promises. All it takes is an e-mail.

api 9y ago
One more: * Silicon is not a rare material. It's one of the more common elements in Earth's crust. The price is largely in processing and fabrication, meaning it's going to continue to fall like a rock due to economies of scale and optimization.

lgats 9y ago

Here are some important facts from the SEC filing: If the company cannot raise sufficient funds it will not succeed or will require significant additional capital infusions. Rayton Solar is offering Common Stock in the amount of up to $50 million in this offering, but may sell much less. After $7 million is raised, the following $3 million will go to the selling securityholders. Even if the maximum amount is raised, the company is likely to need additional funds in the future in order to grow, and if it cannot raise those funds for whatever reason, including reasons outside the company’s control, such as another significant downturn in the economy, it may not survive. If the company does not sell all of the Common Stock it is offering, it will have to find other sources of funding in order to develop its business. Even if Rayton Solar is successful in selling all of the Common Stock being offered, Rayton Solar’s proposed business will require significant additional capital infusions. Based on its current estimates, Rayton Solar will require at least $35 million to create a 54 megawatt, commonly abbreviated as MW, PV module manufacturing facility. This amount does not include the amount needed to manufacture the PV modules for sale. If planned operating levels are changed, higher operating costs encountered, lower sales revenue received or more time is needed to implement the business plan, more funds than currently anticipated may be required. Furthermore, in order to expand, the company is likely to raise funds again in the future, either by offerings of securities or through borrowing from banks or other sources. The terms of future capital infusions may include covenants that give creditors rights over the financial resources of the company or sales of equity securities that will dilute the holders of the company’s Common Stock. The company has not yet generated any revenues. Rayton Solar has no revenues generated since its inception. There is no assurance that the company will ever be profitable or generate sufficient revenue to pay dividends to the holders of its Common Stock. The company does not believe it will be able to generate revenues without successfully achieving target market sales for the PV module to large scale project developers, large scale retailers and wholesalers, or contractors. If the company cannot raise enough funds in this financing to manufacture and sell PV modules, it will need to successfully sell its solar cells to PV module manufacturers, which will result in less revenue to the company. If that fails, then it will need to license its current and future patents, assuming the company is granted its patents that are currently pending. Rayton Solar is dependent upon the proceeds of this offering for working capital, including for the manufacture of the PV modules. The company is an early stage company. As an early stage company and a company developing a new technology, Rayton Solar may encounter difficulties such as unanticipated problems relating to the development and testing of its product, initial and continuing regulatory compliance, vendor manufacturing costs, production and assembly of its product, and the competitive and regulatory environments in which the company intends to operate. It is uncertain, at this stage of its development, if the company will be able to effectively resolve any such problems, should they occur. If the company cannot resolve an unanticipated problem, it may be forced to modify or abandon its business plan. Operations could be adversely affected by interruptions of production that are beyond the company’s control. The company plans to manufacture its own PV modules. However, if it does not raise enough money, it will sell solar cells needed to produce the PV modules, or license the technology instead. Even if it sells solar cells, the company will rely on vendors to provide silicon ingots and other material. If there are interruptions in the ability of a vendor to provide the necessary amounts of silicon ingots, the company will not be able to meet its production. https://www.sec.gov/Archives/edgar/data/1654124/000114420417002964/v456948_253g2.htm https://www.sec.gov/Archives/edgar/data/1654124/000114420417...

simon_acca 9y ago

The EEVBlog also has a skeptical look on Rayton: https://www.youtube.com/watch?v=IbYtn420QBM https://www.youtube.com/watch?v=IbYtn420QBM

aswanson 9y ago

Very sad to see professors at UCLA acting as directors for this, if its a scam. I'm hoping they're just ignorant of the economics and not committing willful fraud.

s17n 9y ago
To be honest, I'd feel better if it was willful fraud.

matt_wulfeck 9y ago

Regarding Bill Nye, this makes me sad. He really was instrumental in making science fun and exciting when I was young. In his post TV life he's become just another political idealogue. Even doing as far as censuring[1] his own TV show when the science contradicts his social justice message. Now it seems he's coming to normal people with an ax to grind. It's hard to see him not profiting from this endeavor. 1. https://thefederalist.com/2017/05/02/bill-nye-censor-transgender-ideology/ https://thefederalist.com/2017/05/02/bill-nye-censor-transge...

mulmen 9y ago
He also provided a platform to legitimize creationism by debating it as if it is a valid explanation of how the world came to be. I understand the desire to promote debate but I think he fell into the false balance trap. He did a great deal to advance STEM in the millennial generation which should not be understated but nobody is faultless. He is a great educator but I question if he really knows how best to use his platform.
- sillysaurus3 9y ago
  You're just as far in the opposite direction, though. When people have strange beliefs, the best way to deal with the situation is usually to talk to them on the same level, as grownups with valid beliefs. Otherwise you change no one's mind. If we dig through your brain, we'd probably turn up a few questionable beliefs of your own. Most people just aren't that transparent.
  - mulmen 9y ago
    I'm not saying we should refuse to debate in all cases. There are not always exactly two sides and just because someone comes up with a crazy idea does not mean we should spend energy arguing with them. Yes, talking and educating people is an important endeavor and one that Bill Nye has proven to be well suited. However, education and debate are not the same thing and it is easy to legitimize dangerous ideas by putting them on an equal footing with proven concepts in the context of a debate. I have all kinda of crazy beliefs, many that I probably can't even identify myself. That doesn't mean I should waste an expert's time with debate.

john_moscow 9y ago

The stock market in general is moving in a strange direction in the past decade. •First the dividends became the thing of the past as the companies argued that stock buybacks are more tax-efficient. The general public accepted it. •Then the earnings per share disappeared and loss per share became standard. The argumentation was that it's better to invest in growth today and figure out profitability "some other day". The public ate it with not much questioning. •Then it was the voting rights' turn to go with IPOs like SNAP. It raised some concerns (like being excluded from the S&P 500), but didn't stop people from investing either. So if the general public keeps on bringing the money in despite the worsening conditions, it makes sense that someone would come up with even a bolder plan for turning this condition into their personal profit. I blame the agency problem [1]. Too many investment decisions these days are made by someone investing someone else's money and their interests could be different from simply maximizing the returns and too many people blindly trust their money to be managed by someone else without fully understanding the underlying processes. 1. http://www.investopedia.com/terms/a/agencyproblem.asp http://www.investopedia.com/terms/a/agencyproblem.asp

JackFr 9y ago
I don't think you're completely correct about EPS in the broader market, (but correct in the headline names). The rest I agree with completely. What's surprising to me is that there wasn't some sort of retrenchment after the 2007-8 crisis. I agree with your analysis about the agency problem, but I also see the it as too much money chasing too few assets. Ever desperate for return, money managers will chase anything that has a return, whether it's rational or not.
- csomar 9y ago
  We are still too early in the bubble cycle. The returns are higher every year but they are linear. Wait until the public comes (free money?) and discover this; and then you get a parabolic market run and a subsequent crash.
aidenn0 9y ago
I don't think it's agency; I think it's the fact that non-equity based investments have had terrible returns for a decade now. What are you going to do? Invest in a CD?

SoMisanthrope 9y ago

I know that my Karma is going to get nerfed... but Bill Nye is a nucklehead... and he isn't a scientist. He's a performer, seeking fame, adulation, and cash. Hit the ignore button, I recommend.

brianbreslin 9y ago

Is it legal to make investment advice like this and not be a series 7 (or whatever number) licensed broker/dealer? Is the author a stock broker?

andrewfromx 9y ago

isn't the point then, Rayton is a cry for help from Bill Nye? as in, he wants the world's best experts on silicon and solar to come together and work 24/7 on this problem.

gregpardo 9y ago

Not surprising. Bill Nye is a business man not a scientist.