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The Long-Term Stock Exchange Opens for Business

• davedx 6y ago
  Is Warren Buffet involved, I wonder? I’m reading “The Intelligent Investor” at the moment, and it seems to me the principles of defensive investing would align closely with this new exchange.
  • person_of_color 6y ago
    Is this book outdated?
• picodguyo 6y ago
  "They described the immense pressure on companies to pursue short-term results over creating value for future decades and generations." Where does this pressure come from? The board? Can't you appoint a board that is long-term friendly? Institutional investors? Wouldn't the same investors interested in the LTSE also be interested in you on the traditional market if long-term is part of your DNA? Shareholders? Shareholders agree to all sorts of craziness if they like your company (see voting structure of Palantir, Facebook, etc.) Maybe others can elaborate on what problem is being solved here.
  • nicoburns 6y ago
    I have no idea if this solves the problem, but I think the problem is shareholders. Specifically, a proportion of shareholders favour short-term profits, and those shareholders outcompete the long-term minded shareholders leading them to have greater influence over time. These short-term shareholders are extracting value at the expense of wider society, and it's a massive problem.
    • pbhjpbhj 6y ago
      The proportion being ~100%? Then they can move on and suck some other company dry.
    • ethbr0 6y ago
      On the other hand, short-term shareholders, inasmuch as they prefer returned capital, are then freed to invest in other businesses. If PayPal et al. had retained profits in the business for a long term goal, a substantial number of innovate companies couldn't have formed. The more nuanced problem is likely that short-term and long-term shareholders' goals are mutually exclusive. That is, there is a rarely a strategy that's optimal for both. Coupled with the fact that some businesses (apps!) favor short-term strategies, while others (biotech!) favor long-term strategies.
      • nicoburns 6y ago
        > On the other hand, short-term shareholders, inasmuch as they prefer returned capital, are then freed to invest in other businesses. I'm not sure that's a benefit if they then destroy those businesses too.
        • ethbr0 6y ago
          Not all businesses are productive. Look at a few decades of Japanese economic history. If capital is tied up in a failing business that's pursuing a "long term strategy," then it's not freed for new businesses. SpaceX and Tesla (to name two HN faves) probably wouldn't exist had PayPal retained more of its capital.
    • JackFr 6y ago
      If you need money over the long term and you don't want to relinquish control, we have a thing called the bond market. Borrow for 5, 10, 30, heck, even 99 years and your interest is tax deductible! (Borrowing longer than 99 years the IRS may want to talk to you. Your bonds start to look like preferred stock.) Wait -- the bond market won't lend to you cause they don't trust your ability to generate that return for the next 20 years? Go to the junk bond market -- they'll lend to you. In fact here's an idea go to the junk bonk market, and borrow money to take your company private -- out of the hands of those grubby short term shareholders.
      • nicoburns 6y ago
        The public markets aren't just designed to maximise shareholders value. Maximising shareholder value is supposed to be a means to maximising societal value. If the shareholder model isn't doing that then it isn't fit for purpose.
        • JackFr 6y ago
          The perpetual, limited liability enterprise as legal person, owned via tradeable claims on equity, managed by professionals distinct from the owners, what we call modern financial capitalism, has been a boon to the world. Obviously it’s not the only way one could organize productive endeavors. But it’s pretty well understood that it produces greater long term economic growth than any other competing system. It has known shortcomings, but maximizing shareholder value is a really good solution for the agency problem introduced by the creation of a non-owner managerial class.
          • nicoburns 6y ago
            > it’s pretty well understood that it produces greater long term economic growth than any other competing system... It has known shortcomings. I mostly agree that it's better than other system that we've tried in the past (although I'd argue that the more highly regulated capitalism with higher taxation levels of the 60s-80s was slightly better than our current (post-90s) deregulated system). But I'm a bit more ambitious than you. I don't think we should rest on our laurels and accept the known shortcomings. I think we can do better, and I think we should actively look at doing so. I feel like maximising shareholder value is a mediocre solution to the problem introduced by the creation of a non-owner managerial class. I'm not entirely sure what the best solution to the problem is, but I'm convinced that we need a better one than the one we have.
    • DennisP 6y ago
      One solution might be for shareholder votes to be weighted by the length of time they commit to hold the shares.
  • AznHisoka 6y ago
    One of the problems with the regular stock market is that valuations are not tied to the future cashflow of the company. This isn’t how the LTSE works but it would be awesome if there was an exchange that required every company to pay a fixed percentage of their cash flows every year after X years. Combined this with a minimum holding period, and I dare people to bid $300+ for Tesla stock :)
    • pavlov 6y ago
      I don’t get it. There are already plenty of public companies that pay extremely predictable dividends. This is a popular investment type for retirement portfolios, among others. Why should they be on a separate exchange?
      • deleted 6y ago
        [deleted]
      • AznHisoka 6y ago
        The dividend is not based on their cashflow. So if Apple is paying 1% dividend on a $100 stock price, but their cashflows increase every year, they're still paying you $1 every year. What I'm suggesting is an exchange where the dividend is a fixed % of their cashflows. Let's say it's 1%. If their cashflow is 1 billion, then 1% of it goes to their shareholders. If it doubles the next year, then 1% of that 2 billion goes to the shareholders. Combine this with a minimum holding period (ie 1 year), and you've basically now made the stock price equate to its fundamentals. ie how much cashflow it's generating in the future. If investors think it'll go up, they'll bid the price up. not because they want to sell it to a greater fool.
        • howeyc 6y ago
          I'm not certain, but I think you just described a REIT.
        • derivagral 6y ago
          As I understand it, the dividend is set typically in a dollar amount and the % is a metric derived from that. I agree that the figure is (usually) a bit nonsense. However, I don't think your phrasing is as clear as it could be. If Apple announces a 10% dividend with a 1T market cap that's $100b in distribution. If the market cap doubles to 2T later that year, that dividend payment isn't suddenly updated to $200b; it just shows up as a 5% dividend in your typical metrics.
  • SamBam 6y ago
    Yes, I feel like more of an explanation is required. Investors in existing exchanges already understand the different metrics companies might be categorized under -- value vs growth, for example -- and this seems like "extra-long-term value." But does that require a new exchange, or just a new valuation for companies? How about an index fund that invests only in such companies? I would probably invest in a "Vanguard Long-Term Growth Fund," and I would assume that companies that got themselves on such a fund would want to stay there. Perhaps the LTSE includes new rules for things such as how often stocks can be traded, but this isn't evident from that blog post, or the first one referenced in the post.
    • pmart123 6y ago
      In Europe, companies like LVMH and L'Oreal has bonus dividends or extra voting rights for long-term institutional shareholders already. Essentially, if you hold onto shares for over 1 year, 2 years, etc., you can offer shareholders additional incentives.
      • Galanwe 6y ago
        Do you have a source for this? I don't see how that could be possible, unless they created a new share class for these long term investors. The price of the share has to be adjusted at the dividend ex date to reflect the drop of value induced by the dividend payout. If not every holder of the share class benefited from it, then this is obviously unfair. Now if you are talking about different share classes, then they would have to either be issued to current shareholders (e.g as rights issuance, in which case every shareholder could have them, long term or not), or publicly traded (same thing basically, everyone could have them, long term or not), or privately traded. In that last case, I would not really say this is "for long term investors", it's more a matter of private equity / politics / governance. Don't expect to enter that kind of deal unless you are a _big_ institutional investor.
        • cdmoyer 6y ago
          Specifics about L'Oreal. https://www.loreal-finance.com/eng/registered-shares-loyalty-bonus https://www.loreal-finance.com/eng/registered-shares-loyalty... General discussion of the concept in France. http://jpkoning.blogspot.com/2016/09/the-french-shareholder-revolution.html http://jpkoning.blogspot.com/2016/09/the-french-shareholder-... > Despite ensuing controversy in the French legislature over the fairness of elevating one class of shareholder above the rest, the ability to provide prime de fidélité was enshrined in French law in 1994, with several limits.
  • m12k 6y ago
    I think this is less about attracting investors who think long-term than it is about telling investors who think short-term to go somewhere else.
  • tomhoward 6y ago
    The pressure comes from investors. (The board is elected by shareholders, so in theory they represent the wishes of investors). It's extremely difficult/rare to find investors who will just sit back and trust the CEO run the company as they see fit, particularly in a world where "unicorns" are going from zero to $billions in a few years. It happens occasionally, but only in the case of extreme outlier companies where the company is already a rocketship and thus the CEO/has already proven themselves - e.g., Apple/Jobs-post-mid-2000s, Facebook/Zuckerberg. Whilst plenty of companies could reach huge scale over a longer period of time, it can be difficult for investors/outsiders (and indeed the management themselves) to know whether their company really is a slow-building long-term winner vs a zombie. Perhaps what the LTSE is doing is attracting investors who are willing to be patient over a slow/long-term build, but to also work with the companies to ensure they really are on a path to long-term success and not in zombie mode.
    • qeternity 6y ago
      I don't know why people continuously repeat this narrative. Two of the largest companies in the world, and in the history of humankind, are constantly marched higher by this "shortsighted" investor base: AMZN and TSLA. People say companies pursue short-term gains but in reality they just mean they pursue things they disagree with. And herein lies the dirty secret: professional investors aren't short-sighted, they just don't value the things you do because (shocker) the average Joe doesn't really understand how to create shareholder value.
      • Terr_ 6y ago
        > Two of the largest companies in the world Survivorship bias?
        • qeternity 6y ago
          No, because the whole premise here is that investor behavior prevents this kind of bias. You can't take the whole argument and then cast massive, glaring contradictions to the core premise as merely bias.
  • einpoklum 6y ago
    > Shareholders agree to all sorts of craziness if they like your company In my very limited experience, it is the _company_ which must accept all sorts of craziness from the shareholders rather than the other way around. Which is also how it stands officially... > Institutional investors? Wouldn't the same investors interested in the LTSE also be interested in you on the traditional market if long-term is part of your DNA? Not clear at all that they would, if individual officers expect to have to justify short-term-losses.
  • x87678r 6y ago
    There is no pressure. Good examples are Amazon and Tesla that make very little money and are valuable now because of their long term outlook. If you really do believe it is investors driving short term outlooks, a different exchange wont make a difference to how many investors buy the stock.
  • dcolkitt 6y ago
    I'll give a shareholder's perspective. Management, when left unchecked, frequently engages in in wasteful empire building and prestige projects. The most apparent manifestation of this is in mergers and acquisitions. Decades of evidence shows that the median merger destroys shareholder value for the acquiring company. Imposing strong controls on corporate management is one of the most important thing that shareholders can do. This might take the form of independent boards, which aren't handpicked by the CEO. Or the removal of poison pills (which raises the threat of a hostile takeover for underperforming companies). But most important of all is the existence of transparent, consistent, regularly evaluated metrics. That means quarterly earnings targets. Like any job, CEOs need consistent feedback to keep their incentive aligned with those who employ them (shareholders). Management has shown time and time again, that when monitoring is weakened, they go off the reservation and destroy shareholder value. The good thing about earnings is that it's they're easy-to-measure, hard-to-fake tangible proof of continuing performance. In contrast stories about "long-term value" or intangible promises of future rewards are usually BS used to justify extravagant empire building while the CEO uses the company's balance sheet as his personal piggy bank. Lest anyone think that evil Wall Street shareholders are hobbling visionary CEOs, observe the rare cases when management does prove its credibility. Prime example is Amazon, which time and time again has scarified short-term earnings for long-term development. And nobody could possibly claim that it's punished by Wall Street for this. The difference is that unlike 99% of CEOs, Bezos has conclusively proven his ability and alignment with Amazon shareholders.
    • gogopuppygogo 6y ago
      Bezos was an investment banker. Before he had the track record of long term development (only born from long term efforts) he knew how to speak Wall Street and had a track record on Wall Street. Most CEO’s will never be capitalized like him for long term empire building so it’s hard to say there couldn’t be more Amazon sized successes out there if Capital was more accessible for longer term visions.
      • darkerside 6y ago
        This seems sensible. If you want the goodwill from your investors to make a long term bet like Amazon did, you need to explain it to them in terms they can understand. It's a language anyone can learn with sufficient training and experience.
  • rectang 6y ago
    > Maybe others can elaborate on what problem is being solved here. I found these two URLs helpful in understanding how LTSE sees its role: https://www.ltse.com/faq https://www.ltse.com/faq > Q. Would companies that list on the Long-Term Stock Exchange report quarterly earnings? > A. Yes. By law, U.S. public companies are required to report earnings at least quarterly. The difference is that the listing standards of the Long-Term Stock Exchange are designed to change the narrative for success, so that the quarterly results are viewed in context as part of a long-term narrative. https://longtermstockexchange.com/listings/principles/ https://longtermstockexchange.com/listings/principles/ > Long-term focused companies should consider a broader group of stakeholders and the critical role they play in one another’s success. The focus seems to be less on constraints on traders and trading, and more on policies that companies listed on the exchange must fulfill. So the LTSE doesn't have to be the exclusive venue for trading and a company can be dual-listed on LTSE and another exchange — the mere fact that the company is listed on the LTSE gives you a crucial piece of information.
• sfard 6y ago
  I read this article and skimmed the original and I'm still not sure what the exact details of this exchange are. No robo/quant investing? Minimum hold periods? No requirements for quarterly earnings? No penny stocks?
  • Maximus9000 6y ago
    Me too. According to the wiki page: > Operating principles: In an earlier SEC filing, LTSE said that its corporate governance rules might include: increased voting rights for shareholders who hold company stock for long periods of time, restrictions on offering short-term incentives to executives, disclosure of impact of any stock buybacks, and requiring companies to have a board-level long-term product and strategy committee. https://en.wikipedia.org/wiki/Long-Term_Stock_Exchange https://en.wikipedia.org/wiki/Long-Term_Stock_Exchange
    • imagin8or 6y ago
      So you make a fund which holds the stock of the listed company long-term, and trade the fund as normal... this doesn't seem robust yet.
      • liminvorous 6y ago
        This would add a level of indirection to stockholders trying to influence the company though, right? You have to make the fund managers put pressure on the company to give you short term gains, rather than pressuring the company directly.
      • andreareina 6y ago
        In a prior post the founder claimed that there are ways to deal with that. After all, AIUI stocks in the States are already actually held by the Depository Trust Corporation, so the system already deals with indirection.
  • imagin8or 6y ago
    Agreed. I suspect that it's more like "The Stock Exchange For LongTerm(TM) Certified Companies", so more like the requirement that exchange-listed companies are at least 70% public. Presumably that could mean requirements on board memberships, dividend levels, types of employment perhaps? I find it a bit hard to see what stipulations they would have that aren't just good governance.
• SketchySeaBeast 6y ago
  So how do we monetize this? I see the idea is the long term goal of sustainability, but how does one get their money out at the end? I wouldn't have these expectations for most of these initiatives, except for the use of "stock exchange", so I expect there to be some reason to exchange stock. Call it "the green list" or something if there's no money to be had, and that's totally fine, but the name doesn't match the goal.
• MrPowers 6y ago
  Buffett, Bogel, and other famous financial folks signed a doc to overcome short-termism in 2009 that goes into more technical details: https://assets.aspeninstitute.org/content/uploads/files/content/docs/pubs/overcome_short_state0909_0.pdf https://assets.aspeninstitute.org/content/uploads/files/cont... Modern executives have incredible pressure to hit quarterly numbers and the ones that provide value in the long term are the ones that can effectively ignore this pressure. Short term pressure also forces firms to play accounting games like taking big goodwill impairment losses in a down quarter, so they don't need to perform a writeoff in subsequent quarters.
  • jl2718 6y ago
    This is a good example of an accounting trick that should not be allowed by an exchange-listed company. It’s simply a trick to make a loss not count against earnings. It’s not even shown as a liability like a self-loan would. In M&A situations it’s usually shown as an asset. The point being that you can’t trust the earnings number and you can’t trust the balance sheet asst value, so you really don’t know anything about a stock. I’m surprised that no analyst firm has published a common GAAP-based valuation. Perhaps because it’s impossible, but that underlies the problem for small investors.
• claydavisss 6y ago
  Great, a new service that lets any present issues with a company be excused in favor of some forever-distant "long term". And why is it even an unalloyed good that a company persist over a "long term"? If someone else can do better today, I want to move investment to them today.
• owens99 6y ago
  Congrats to Eric on this. The thing missing from this article is: What does this actually mean? When will companies start listing? Who will start listing? How do companies list? What are you offering? etc.
  • gjs278 6y ago
    why congratulate him if you don’t even know what it means? maybe it’s actually a terrible idea.
  • canada_dry 6y ago
    Yes, interesting article. Though, if this were a software announcement I'd label it vaporware.
    • wombat-man 6y ago
      this article feels like when one person at a bar tells me about their startup that has like 0 progress. lmk when this materializes I guess.
    • deleted 6y ago
      [deleted]
• pdq 6y ago
  I’m still trying to understand the rationale. They should create a comparison against the current public markets to highlight the differences. Based on the “long term”, I’m guessing the core concept is no quarterly reporting, so companies can focus on long term initiatives. However, how do they explain Amazon, who reinvested what would be their profits for over a decade, to continue expanding their business and build the massive Walmart juggernaut? All Bezos had to do was describe the strategy to the market, expand quarterly sales, and many investors were patient over the years.
  • aesh2Xa1 6y ago
    Amazon is a great counter example and I don't have an argument that says Amazon does focus on short term at all, and certainly not to its detriment. However, an exception to the rule is not the rule.
• omega3 6y ago
  Sounds like something designed to impair price discovery and efficient allocation of capital. Ultimately this will rise the cost of capital for the companies listed there.
• x87678r 6y ago
  The only way I think investors could invest more in companies with a long term view is better margining so you could borrow money to invest in companies without getting margin called. Eg you can buy a house with 5% down, but you can't do this with stocks because normal volatility means you'll likely be wiped out.
  • jl2718 6y ago
    I suppose this is possible if it was an amortized loan against personal liability like a mortgage. Clearly there is more volatility in the asset, so the risk would have to come down by insurance. I think it would get quite expensive to service these loans.
  • eru 6y ago
    You can buy (and sell) options to limit the impact of that volatility. But I'm not sure why you would want to encourage margining when you are against volatility? The capital for the margin loan has to come from somewhere too. So instead of person A putting up 5$ and borrowing 95$ to own 100$ in stock, and person B lending those 95$; it might be better for volatility for person A to own 5$ in stock and B to own 95$ in stock? I am not sure. For full disclosure: my investment strategy involves margining. (Btw, I do think that 5% equity on houses is bad. It's mostly a function of land prices going up so much.)
• alpineidyll3 6y ago
  The density of unsubstantiated platitudes in the marketing for this is high even for silicon valley. There's a good evolutionary reason human beings focus on short term thinking. We have no demonstrable ability to forecast into the distant future! Corporate governance is eff'd, and does promote short-term shenanigans, but technology that enables shareholder governance is the solution. Not just avoiding the price discovery process.
  • gkilmain 6y ago
    > We have no demonstrable ability to forecast into the distant future! Well I woke up this morning and got myself a beer!
• lordnacho 6y ago
  Suppose LTSE becomes a thing, and they find some companies that they can certify as Long-Term(TM). What stops those shares from being traded on some other exchange, eg BATS? What is it about the venue that makes it special? It seems that once an investor thinks a company has some desired characteristic, all they'd care about is where to get the shares as cheaply as possible.
  • toufka 6y ago
    I think the companies can be traded on any exchange - it's not really a function of stock price. The LTSE kind of venn-diagrams around the requirements of the other exchanges (for now). So a company is then held to different (greater) standards (even if its also listed on other exchanges).
  • james412 6y ago
    NMS shares can trade on any exchange, but there is still a primary listing exchange. They're mainly (AIUI) responsible for publishing data on various administrative minutia such as the handling of dividends and splits. I imagine most of LTSE's attraction to companies is enhancing the perception of only accepting listings from companies with a long-term view Much like as an investor you'd think twice before purchasing an OTCBB share today, or perhaps 30 years ago pay more attention to the difference in listing requirements between Nasdaq and NYSE, I think that's what's intended here
• BiteCode_dev 6y ago
  Genuine question, what good does the ability to buy and sell stock on the short term do for humanity ? Does it have any specific vertue appart from allowing one to make make money by betting correctly ? Why are not all sales required to be long term ?
  • danimal88 6y ago
    Not a strong conviction from me but I can see a case for liquidity when you can sell quickly.
    • BiteCode_dev 6y ago
      I'm not talking about the times it take for selling as much as the absence of delay between buying and selling.
      • eru 6y ago
        See https://en.wikipedia.org/wiki/Market_maker https://en.wikipedia.org/wiki/Market_maker
      • smabie 6y ago
        Factors, the world, the firm trading, etc all change daily. Also market makers provide liquidity through buying and selling quickly. If you had to hold a stock for a long amount of time before selling it, you would find it very hard to buy or sell stock.
  • janhenr 6y ago
    The fact that stocks can be bought and sold quickly has a use, namely that the price should signal how the market values this asset.
    • BiteCode_dev 6y ago
      But what good does it do to have such a instant information on speculative value outside of the world of making money with it ?
• zbruhnke 6y ago
  So excited to see this vision come together Eric. I honestly hope one day we're taking HMBradley public on the LTSE. I have never felt more aligned with a mission or a vision, Systematically allowing companies to take a long term view without being punished is what the market needs. Or put another way ... Adam Smith > Milton Friedman I cannot wait to see where this goes and the mechanics LTSE puts in place to help reward long term thinking and long term holders
  • eries 6y ago
    Thank you!
  • itsoktocry 6y ago
    >Systematically allowing companies to take a long term view without being punished is what the market needs. Why is the default that companies are "punished" for long-term thinking? I'd bet that there are far more cases of long-term investors "punished" in the public markets by short-term thinking executives than vice versa.
    • zbruhnke 6y ago
      The simplest answer to this is regularly tying executive compensation to short term stock performance ... it leads to more Jack Welch's and less Jeff Bezos' ... Ballmer is another prominent example, Microsoft all but died under him while his key metric was stock price, that's not a win in my book
• deleted 6y ago
  [deleted]
• spurdoman77 6y ago
  Not any technical details. Doesnt make sense. Short time speculators are not an enemy for long time investors. Also, doesnt make sense to enforce long-term view on exchange level.
• booleandilemma 6y ago
  The objective was to create a public market designed for trading the stocks of companies organized to sustain long-term thinking How are they defining long-term thinking? Is Walmart thinking long-term? Is Uber?
• yayr 6y ago
  I wonder what the actual business model for the company is and how the incentives from this will affect the LTSE vision behind "long-term investing". As far as I have seen on the website the company runs various freemium SaaS products like captable.io, startuprunway.io and hiringplan.io. They obviously want or need to monetize on that. edit links: - https://captable.io https://captable.io - https://startuprunway.io https://startuprunway.io - https://hiringplan.io https://hiringplan.io - https://fast409a.io https://fast409a.io - https://startupdisclosure.io https://startupdisclosure.io - https://notegenie.io https://notegenie.io
  • awinter-py 6y ago
    yuuuup it feels like the third page in the godaddy checkout flow where it's like 'maybe you need our wordpress, email, and VPS hosting in order to launch your website' also feels like a data grab. traditional exchanges don't collect this stuff, and the SEC doesn't collect most of it.
    • deleted 6y ago
      [deleted]
  • sbilstein 6y ago
    I spoke to a recruiter for LTSE a year ago and they were hiring lots of engineers to compete with Carta. I was a bit disappointed with the pitch; sure Carta is useful but I had hoped LTSE was a place to do some really revolutionary stuff. It seems like that aspect of the company is a ways off and from my limited understanding, it doesn’t seem like today’s announcement makes it tangibly different than NYSE. I’m neither a banker nor a major investor so I’m really curious to understand how they see this as a paradigm shift. For now it looks like a stock exchange started by someone I really admire but not much else.
    • rayshan 6y ago
      Companies built to last are built that way from the start. The culture and contracts baked into the companies follow them for life. That's why we build software for ourselves and our fellow founders. I wrote more about this here: https://shan.io/writing/ltse-launch-americas-newest-stock-exchange/ https://shan.io/writing/ltse-launch-americas-newest-stock-ex...
• lr 6y ago
  Just throwing this out there... Why not a simple rule to require all shares to be held for at least 24 hours before selling? It would certainly change the game in every way imaginable.
  • kumarvvr 6y ago
    Hundreds of companies will lose revenue from commissions / fees of transactions.
  • deleted 6y ago
    [deleted]
  • codeulike 6y ago
    It would but powerful vested interests would probably fight it tooth and nail. See https://en.wikipedia.org/wiki/Tobin_tax https://en.wikipedia.org/wiki/Tobin_tax
    • eru 6y ago
      Not just powerful vested interests. Anyone who knows anything about economics knows that transaction taxes are bad for efficiency etc. Tax wealth for all I care. But don't tax transactions. (Btw taxing transactions would actually make financial speculation more profitable. Because bid/ask spreads would become wider and prices more volatile.)
    • JumpCrisscross 6y ago
      > powerful vested interests would probably fight it tooth and nail Minimum holds are very different from trade taxes. (The latter is stupid for a variety of reasons.) Minimum holds would make market making more profitable.
  • eru 6y ago
    What do you want to accomplish here? Market makers are good for widows and orphans. You don't want your grandma to have to be careful with the day of the week or time of the day when she sells her stocks. See https://en.wikipedia.org/wiki/Market_maker https://en.wikipedia.org/wiki/Market_maker
• m1117 6y ago
  I read this post and its vagueness gave me no info. Where's the link to the LTSE? How does it work? What's the plan? Any quantitate metrics?
• asaph 6y ago
  How do I create an LTSE account and start investing? I went to https://ltse.com/ https://ltse.com/, clicked on the menu and selected "Exchange". But I only see marketing material. Update: I found the Sign In/Sign Up URL: https://account.ltse.com/ https://account.ltse.com/
  • spelunker 6y ago
    You'll probably need to go through a broker - you don't buy directly from the other exchanges like NASDAQ either. If/when any brokers are on board I'm sure LTSE will be sharing that information.
• superqd 6y ago
  Hmmm, a bit disappointed after reading their blog and site. I expected that they'd integrated some clever rules around stock trading itself in order to force, or encourage, long term thinking. I expected something along the lines of, "no shorting allowed", "stocks must be held a minimum of 6 months", etc. There was nothing like that, all they have is the rule, "come on guys, think long term". I fail to see how this will have any meaningful effect on "long term vision", if they still allow your stock price to be dumped at the first sign of trouble, or allow people to bet against your company when some irrelevant bad news hits, or no one else sees value when you decide to deepen your spend on R&D for some long term plan. If people freak out, or think they can profit off of your lack of current obvious value, the you are still going to have short term fluctuations that you will feel pressured to address. The problem with short term thinking isn't from companies or company leadership, they are reacting to the natural short term fluctuations in their value because of the short term thinking of investors. Shareholders are not gonna understand your vision every time you decide to engage in a long term strategic shift in priorities, so they will react when they find out, and that reaction can swiftly damage a company's value. If shareholders can still trade over short-terms, then you will still have large scale short-term fluctuations that CEOs will be forced to address, as more and more potential buyers will be influenced by the low price of a stock caused by other skittish short-term thinking investors. The problem is with investors in stocks, not with the companies unwillingness to think long term. To make such an exchange work, you have to have clever trading rules in place to force longer term thinking.
  • eru 6y ago
    > I expected something along the lines of, "no shorting allowed", [...] That would at least be an attempt. Though to be honest, (other people doing the) shorting is actually very good for the long term shareholder. > The problem with short term thinking isn't from companies or company leadership, they are reacting to the natural short term fluctuations in their value because of the short term thinking of investors. It's not that investors are short-termist. Far from it. See eg how shareholders react to Amazon or Tesla. The problem is the principle-agent conflict: shareholders in general have a very hard time monitoring management. It is neigh impossible to tell a manager with a grand vision that will pay off in 20 years from a manager who burns capital on harebrained schemes for 20 years. Especially impossible to tell before those 20 years are up. That's why investors are so keen on early and hard to fake signals. Returning cold hard cash to investors is one of those signals.
• crazygringo 6y ago
  With all respect to Eric, I strongly believe the concept of forcing "long-term investment" is ultimately a scam. At the end of the day, it's fundamentally a blank check for management to misbehave -- to misspend money, pursue pet projects rather than real business goals, and have nobody to tell them no. There is nothing inherently short-term about the stock market -- this is a myth that keeps getting repeated but has zero substance. Short-term changes in supply and demand add changes to prices, but it's not like anything's 10x off of the value a company is expected to produce -- the net present value of future cash flows. But if you prevent people from selling, then you're preventing the market from holding a company accountable when its management messes up.
  • mcny 6y ago
    > But if you prevent people from selling, then you're preventing the market from holding a company accountable when its management messes up. Is it even possible to hold management accountable for anything at all? Personally, I think executive compensation is the real culprit. I've tried to think of ways to put a cap on compensation but I can't think of any way especially since the management of one company is on the board of another and they are all in it together. Also something I didn't know until recently: board members get paid! How is that not the dumbest thing in the world, I will never know... Personally, I think board members in public companies should get ZERO compensation, no travel allowance, no perks. They own stock, don't they? but I digress. Is there a way to cap executive compensation to a multiplier of the lowest salary paid by the company? like 10x or 50x something? Like if the lowest pay is USD 15 per hour or USD 15 * 2000 = USD 30k then the highest executive compensation (including stock grants, bonuses etc) may not exceed USD 30k * 50 = USD 1.5M which isn't too bad. Is it possible to codify something like this?
    • eru 6y ago
      Why would you want to put a cap on management compensation? The comp for the highest level of management essentially comes out of the same pool of money as the returns to shareholders. If shareholders want to pay the CEO lots of money, let them. It's their money. Especially, C-level executive's pay doesn't really come out of the same pot of money as low level employees' pay. The pay for cashiers at Walmart is more dependent on what Target or McDonald's pay their cashiers than on how much money the CEOs make. Thanks to outsourcing jobs to third parties capping exec pay at some multiple of lowest employee pay doesn't make much sense. Many companies don't directly employ their security guards for example, but pay a third party company. As for board members: they should be compensated however much they can negotiate for. If I were to own a company, I would have opinions on how much the board members should be compensated. But who am I to tell other people how much to pay for services? And I don't think all board members necessarily own significant amount of shares. See also https://en.wikipedia.org/wiki/Independent_director https://en.wikipedia.org/wiki/Independent_director In any case, I don't really understand how capping compensation would help hold management to account? I can see an argument for how management should mostly be paid in eg stock, so that their incentives are aligned properly. But I don't think that's what you wanted to get at?
• eries 6y ago
  Hey everyone, Eric Ries here. Happy to answer questions if you’d like to learn more about what we are building at LTSE
• fastball 6y ago
  I have a question: what exactly is different? Wasn't clear in the blog post. Do you prevent day-trading or something similar?
  • eries 6y ago
    We require companies that list with us to adopt corporate governance that aligns their behavior and incentives to the long term. I know that doesn’t sound super sexy but we believe this is a high-leverage point for reforms We will have more to say on reforms that relate to reading in the future, but we don’t limit the ability of “tourists” to trade in and out of stocks as normal.
    • rglover 6y ago
      Will those corporate governance guidelines be publicly available? Are shareholders able to influence these guidelines at all?
      • eries 6y ago
        Yes all of our listing standards are publicly available both on our website and in numerous legal filing Yes, we believe in the role of long-term shareholders in corporate governance
    • jbob2000 6y ago
      What do you define as long term? At some point, the best answer for longevity is for a company not to exist at all, given that the purpose of most companies is extraction, or some sort.
      • eries 6y ago
        We will endeavor not to list such companies
        • levi- 6y ago
          > We require companies that list with us to adopt corporate governance that aligns their behavior and incentives to the long term. How will you handle companies that eventually go against the required guidelines? Could a company become permanently unlisted? And how would that affect any shareholders of the company who purchased through LTSE?
• eries 6y ago
  PS. we are hiring: https://jobs.lever.co/ltse https://jobs.lever.co/ltse
  • Galanwe 6y ago
    > This is an opportunity to join a new stock exchange at a critical time in its development as our first IT Engineer First IT? Wait, how is the exchange running?
    • eries 6y ago
      I hadn't thought of parsing the sentence that way. We mean our first hire dedicated entirely to IT (as opposed to other forms of software engineering)
  • aisofteng 6y ago
    I’m a senior software engineer and software architect at a tech giant that has been lucky to have the experience of launching a new product twice, operationally treating it as a well funded startup and growing it to multimillion dollar revenue while instilling development practices that ensure quality while also being adaptive to change. I read the job description for the senior software engineer posting, and at first thought I might be a good candidate. I generally want to dedicate my efforts to long term betterment of humanity, rather than “we make the world better by making a mobile app for dog walkers” sort of thing, so this position is attractive to me. However, this “full stack” position mentions only JavaScript and Rails as required experience. Is your entire stack Rails and JavaScript? That turns me off entirely (and makes me unqualified).
  • gsumpster 6y ago
    I interviewed with the team not too long ago, didn't get the role in the end but the team was lovely and the interview process was great. Would recommend giving it a shot if you're at all interested, there are some great people working there!
    • eries 6y ago
• NicoJuicy 6y ago
  Add a 1 minute delay on every order and most automated trading would be gone.
  • eru 6y ago
    Why? If everyone has a 1 minute delay, you still benefit from being the fastest. And shouldn't we celebrate the march of technology? In the grand scheme of things, trading is relatively boring. Let the computer do it.
  • qwertox 6y ago
    I'd prefer trading timeslots, like once every 10 minutes, with randomized execution order. You put your orders in, they all get queued up and then the queue gets executed randomly. That would force the traders to think in different terms, closer to the real value of the asset.
• waynenilsen 6y ago
  What support will there be for high frequency trading? What is required for Direct Market Access? Will the realtime data feed be public? What is the fee schedule?
  • eries 6y ago
    - What support will there be for high frequency trading? LTSE's market is designed to create a level playing field for all market participants. We provide equal support across all of our members. - What is required for Direct Market Access? A relationship with a member of LTSE who offers DMA. - Will the realtime data feed be public? Yes, LTSE's market data can be accessed via the SIP's (Securities Information Processor) under the "L" quote. - What is the fee schedule? Free/Free (Add/Remove)
    • waynenilsen 6y ago
      Regarding "a level playing field for all market participants" I don't believe that in an exchange that supports HFT there can be a truly level playing field. There are some technologies that can help mitigate the effects of HFT on the market. One is the approach that AZX [1] took where you do large and infrequent dual auctions. Another approach is to go with an Automated Market Maker (AMM) technology and eliminate the need for order books all together as has become popular recently in the cryptocurrency space. Some background research can be found here [2] but what really took off was Uniswap's innovative use of a "Constant Function Market Maker" [3]. This allows average individuals to provide liquidity while getting the benefits of what is normally only reserved for high frequency traders. I believe that an institutional grade AMM program would be greatly democratizing for the industry. [1] https://en.wikipedia.org/wiki/Arizona_Stock_Exchange https://en.wikipedia.org/wiki/Arizona_Stock_Exchange [2] http://reports-archive.adm.cs.cmu.edu/anon/2012/CMU-CS-12-123.pdf http://reports-archive.adm.cs.cmu.edu/anon/2012/CMU-CS-12-12... [3] https://medium.com/bollinger-investment-group/constant-function-market-makers-defis-zero-to-one-innovation-968f77022159 https://medium.com/bollinger-investment-group/constant-funct...
• nend 6y ago
  Are any companies currently applying to be listed?
  • eries 6y ago
    The listings process is highly regulated and any conversations of this type would be confidential, so I can’t answer this one
• venantius 6y ago
  What are your thoughts on listing foreign companies? Asking from the UK.
  • eries 6y ago
    LTSE should work fine for any company that wants to add a secondary listing to access US capital markets, so long as they otherwise meet the listing standards
• dfabulich 6y ago
  It says you’re open for business. What business is now open? Can I buy a share of a company on LTSE today? Can I list a company on LTSE? (I can’t find a way to do either of those things on your website.)
  • eries 6y ago
    Yes, you can do both. Trades happen through stock brokers as with any other exchange. You can track the exchange’s daily trading volume here: https://markets.cboe.com/us/equities/market_share/ https://markets.cboe.com/us/equities/market_share/ The listing application (and attendant legal docs) is here: https://longtermstockexchange.com/listings/documents/ https://longtermstockexchange.com/listings/documents/
    • powvans 6y ago
      Is there a publicly available list of companies that are listed on the LTSE?
      • eries 6y ago
        Not yet
        • IshKebab 6y ago
          Can you say how many it is roughly? Like, are there 10? 100?
• maximilianroos 6y ago
  I can understand the effort to weigh firm's incentives towards longer-term incentives, and I can see how the suggested changes to companies' structure would achieve that. But why do those changes need to be coupled to the exchange a company assigns as its primary listing venue?
  • eries 6y ago
    Companies can dual-list so LTSE does not need to be the primary venue Stock exchanges have the obligation to set standards for the behavior of managers and investors. It’s this dual-stakeholder role that uniquely allows our reforms to take hold. Believe me, I looked long and hard for an easier way to get this done
• b20000 6y ago
  where are the VCs that share this vision? when I tried to raise capital on a long term vision for our hardware startup I got laughed at.
  • eries 6y ago
    Tell me about it...
    • Applejinx 6y ago
      Try Nick Hanauer.
  • smabie 6y ago
    I dunno, it seems like most VCs care about long-term visions. I mean, look at Uber and such. Still unprofitable.
    • b20000 6y ago
      it's like with banks. once they've put in a substantial amount of money, they can't pull out anymore. it's a case of "too big to fail".
• xorcist 6y ago
  Want to invest in stocks long term? Buy some stock in an unlisted company. Then you are stuck with them whether you like it or not. Above only partly in jest. Modern crowdfunding-style stock platforms offers this to anybody, and while most startups fail, there are exceptions. The long term commitment required is a different experience.
• biznickman 6y ago
  Congrats! Aside from viewing volume, where can I see the individual stocks listed on the exchange? Also, as a side note, it would be interesting if you had an LTSE index fund!
  • eries 6y ago
    None are listed yet. Give us a little time, it’s only Day One
    • silentsea90 6y ago
      Echoing what somebody else said, "open for business" feels a bit disingenuous from a retail investor perspective as there is no place to trade stocks, no sign up, no stocks listed etc. A more restricted announcement (read directly to companies) would probably have been a better idea to gain that critical mass. For reference, whenever Uber/Lyft "open for business" in a new city, they don't just flip the switch to enable the app in an area. They work towards gaining a critical mass of drivers to ensure reasonable quality service levels, incentivize drivers to stay online as rides trickle in etc. Or is this the "Lean Startup" approach to get a feel for the reception of the idea though I'd imagine that was done before you got started on building the product :) Overall, I am very excited for what you're building and will watch out for more substantive updates! It is super cool that your team is working on challenging the status quo in an unconventional manner.
      • eries 6y ago
        I don't understand this criticism. We are actively trading stocks today: https://markets.cboe.com/us/equities/market_share/ https://markets.cboe.com/us/equities/market_share/ You can call your broker right now and ask them to direct your orders to a specific exchange, including "L" on the SIP.
        • mkolodny 6y ago
          So you can buy stocks through the LTSE that aren't listed on the LTSE? If so, why would someone do that? I think GP's point is that you're saying "we're open for business", but the LTSE isn't offering people who buy stocks any added value yet.
• kenned3 6y ago
  Amazing to see you here Eric. Having worked in Equities most my life I love the idea you are putting forward here. We really need to stopthinking in terms of "next quarter" and structure our markets for the longer term. Question for you : What are your thoughts on corporate buybacks on your exchange?
  • eries 6y ago
    I think buybacks have occasional legitimate uses, but there’s a reason that they were considered basically illegal not that long ago I think if companies are sincere in their desire to use buybacks only for good purposes, they should commit to report “EPS net of buybacks”
    • dasudasu 6y ago
      They do. The number of shares outstanding is publicly reported. You can already divide earnings any way you want yourself. To me shares buyback is just the counterpart to selling shares on the open market to raise capital. It’s anti-dilutive and can be in the interest of shareholders.
      • vmception 6y ago
        Disclaimer: I can take any side of the regulatory pendulum with a straight face, and that also means pointing out accurate statements with no real opinion on either. Buybacks were illegal because it falsely showed demand in the market. False demand is a key point in modern market manipulation and fraud cases. Given that reality dissolved 30 years ago, of course we are all familiar with the arguments "It’s anti-dilutive and can be in the interest of shareholders"
        • alasdair_ 6y ago
          My understanding is that stock buybacks are generally better than issuing a dividend for the simple reason that with a buyback, an owner can choose to sell (and incur a taxable event) or not sell, while with a dividend the taxable event is forced upon them.
• al3xandre 6y ago
  Shouldn’t this be an index fund with conditions to be included rather than a stock exchange ?
  • eries 6y ago
    Probably. I'd love it if someone would build this and get companies and investors to take it seriously.
• RivieraKid 6y ago
  The assumed problem is that investors of publicly traded companies pressure management to make suboptimal decisions, because they overfocus on short-term performance instead of maximizing the present value of all future cash-flows. Looking at TSLA, AMZN, FB... I'm skeptical about this premise.
• isaacn 6y ago
  Is there an index fund where I can easily buy into all the companies in the LTSE?
  • eries 6y ago
    Not yet
• xivzgrev 6y ago
  I’m not sure how this works practically. Let’s say Apple wants to do this, and they list. Do they issue new shares of stock, and that dilutes their other shares? How is the price determined on this exchange? If there are no restrictions on trading, and Execs get stock on LTSE, Wouldnt market reactions to quarterly reports still move price around, incentivizing short term results?
• CapriciousCptl 6y ago
  Can/will LTSE restrict options trading?
  • d--b 6y ago
    If they don't do options themselves, nothing prevents another exchange to list options on prices published by the ltse. So if the exchange is succesful, it's likely they will list options there too.
• specialist 6y ago
  Congratulations. "We shape our buildings; thereafter they shape us." -- Winston Churchill Though I barely understand such things, I'm very excited by your LTSE and Katsuyama's Investors Exchange (IEX). Listening to your interviews about LTSE, my takeaway is that your goal is to allow companies to be judged on their own merits, instead of someone else's. So one side effect may be to help migrate private equity funded companies back into the light. Terrific, right? I hope others see that our markets are designed. They are human artifacts. They are not natural laws to be accepted as-is. That we can shape and nurture markets as we see fit. That the rules matter. You and Katsuyama identified opportunities for improvement and engineered solutions. You're meta-geeks. Like programmers who make programming languages, so that others might benefit. Happy hunting.
  • eries 6y ago
    Thanks for the kind words
    • cdnpal 6y ago
      Eric, I saw you present at Twiistup years ago with that CEO guy from Demand Media, where you exclaimed that you crammed untested spyware toolbars into IMVU just to get money, knowing it would blow up your users' computers. It's clear you got some money since then, but other than that why would we trust you with a stock exchange in retrospect? Were you hoping we would forget?
      • jzig 6y ago
        There are not enough upvotes for this comment.
        • cdnpal 6y ago
          Eric, I see you've commented hours after my question was posted, but neglected to answer? You openly admitted to infecting IMVU users' computers with malicious toolbars on purpose to make quick, easy money at Twiistup in a speech on startups, and now you are asking us to buy stocks on your exchange? You're not even mentioning that SEC REGSHO applies to ANY US stock exchange, so all the brokers have to do is let certain clients borrow and that's the end of the "long term" regardless of your marketing of this. I guess you were a notch better than your Twiistup co-presenter Robert Scoble?: https://www.google.com/search?q=robert+scoble+harassment https://www.google.com/search?q=robert+scoble+harassment So reply Eric, tell us why you have become so trustworthy? Is it that you cajoled people into getting you truckloads of cash? Of course it is.
• JosephObell 6y ago
  What criteria is necessary for companies to be listed? Can we have you on our podcast for 10 minutes to talk about your exchange? We are a business podcast in Austin, Texas.
• JosephObell 6y ago
  What criteria is necessary for companies to list on the exchange? Can we have you on our podcast for 10 minutes to talk about the exchange? We are called Moontower Business based in Austin, Texas
• yalogin 6y ago
  Isn't this solved by an app that only lets you buy and sell long term? I mean why do we need a new exchange for it? Sorry, if that sounded harsh. I am not familiar with the business nuances around exchanges and so the question.
• tempsy 6y ago
  The irony of launching now is that the Federal Reserve has created an environment with zero rates and endless cash that has made speculative stocks much more attractive in the traditional public markets. The stock market has become very forgiving if you can show top line growth regardless of whether you're profitable or not.
• mguerville 6y ago
  I assume companies will still need to be "priced" and then supply/demand will affect prices, do you intend to have any unique mechanisms to reduce volatility and short termism by investors or is the idea to be hands off and control the long term focus in "softer" ways?
  • eries 6y ago
    Yes we do, but there’s not really a good way to summarize our plans here. Suffice to say we are keenly aware of the need to reduce the aspect of volatility that is driven by speculators
• dtrailin 6y ago
  Given current 50x multiples and high valuations for unprofitable tech companies I don't think there is much evidence that that current stock markets are unable to value long term ventures. As well the extent to which a company is expected to deliver quarterly results is more defined by their board and capital structure than anything in inherent to NYSE or the NASDAQ.
  • deleted 6y ago
    [deleted]
• an_opabinia 6y ago
  It's pretty awesome. Which was harder - building a stock exchange, or getting someone to read a whole book? With the benefit of hindsight, which of the following would you say is the biggest predictor of growth in equities prices: everything else, greater buying, less selling, brand, liquidity, or previous prices?
  • eries 6y ago
    What makes you think I ever did the latter ;) In all seriousness, there’s no comparison. A regulated national securities exchange is one of the harder kinds of startups you can attempt. I’m pretty sure that over the long run equity prices are a mirror of the fundamental value creation that companies do by serving customers. The problem is that this can become distorted “longer than you can stay liquid” as the old saying goes
• tempsy 6y ago
  what incentives do companies have to be "long term focused" in a market environment that has become highly frothy and speculative due to central bankers? when investors will buy anything that whiffs of growth and executives can raise debt for cheap and raise secondaries easily no one on either side is exactly clamoring for a "long term" focused exchange right now.
  • eries 6y ago
    No one? At least a few people are clamoring for it, surely? There are some investors and companies that tune out the noise and try to make lasting change, making a dent in the universe, that kind of thing. I think they could use financial infrastructure to support their ambitions. Seems pretty simple to me
    • tempsy 6y ago
      clearly you’re biased, but hard to imagine the actions of the Federal Reserve that has pumped liquidity into the economy and cut rates to 0 that many predict will last for 5+ years make an exchange that is focused on “long term” less interesting to both executives and investors. we live in a market when there’s a dozen SPACs listed every week and a company like Nikola that doesn’t even have a functioning product has a valuation of $20B. liquidity and support from central bankers have naturally made investors more patient and willing to ignore short term road bumps.
• billman 6y ago
  Best of luck Eric. I can feel the ship turning.
  • eries 6y ago
    Thanks
• jaesung 6y ago
  I don't have any questions, I just wanted to mention that I think you're changing the world more than most people realize.
  • eries 6y ago
    Thank you! I don’t mind being misunderstood for long periods of time, that kind of goes with the territory. But still, it’s nice to get a shot in the arm every once in a while
    • zonethundery 6y ago
      Opening a new exchange is a huge achievement. Congrats on making it over all of the regulatory (and other) hurdles! I wish you the best of luck in attracting new listings; it's a fascinating idea.
• NicoJuicy 6y ago
  Will there be a limitation on buying/selling to prevent automated traders? ( Or plans for this)
  • eries 6y ago
    No, that’s currently not legal in the US We focus instead on finding ways to differentiate the experiences of the “tourist” speculators from the “citizen” long-term investors
    • Loughla 6y ago
      >We focus instead on finding ways to differentiate the experiences of the “tourist” speculators from the “citizen” long-term investors Can you expand on this?
      • eries 6y ago
        Sure. I don't have an objection to short-term investors, even the long-term investors like having them around to provide liquidity. But I don't think an investor who has an average equity holding period of 10 minutes should be involved in corporate governance.
• lrobinovitch 6y ago
  As we're seeing right in our face on the West Coast of the US right now, climate change is going to continue to get worse, affecting the globe at least as much as the pandemic and for much longer unless we take serious action now. Does the LTSE structure support companies oriented towards developing rapid climate solutions that will pay off in the longer term, but not at the rate of typical venture investments? If this isn't a focus, why not?
  • eries 6y ago
    Yes. I don’t think any other platform is better suited to such companies
• AndrewWarner 6y ago
  What a bold move, Eric! What does a Minimum Viable Product for a stock exchange look like?
  • eries 6y ago
    You’re looking at it. MVP doesn’t mean “fast” in some absolute sense. It just means fast compared to the underlying cycle time of the relevant industry. I think we did pretty well with this one. That said, there were many many many MVPs that you don’t see that informed the direction we are at now. In some way our private company tools are also an MVP of sorts: https://ltse.com/tools/ https://ltse.com/tools/
• hansdieter1337 6y ago
  “LTSE has joined with several organizations to build and launch a year-long experiment to support the economic mobility of Black entrepreneurs impacted by COVID-19.” (ltse.com) Congratulations, you think you do the right thing and became racist.
  • charlesu 6y ago
    How is that racist?
    • 762236 6y ago
      I suspect he means discriminatory. It clearly can't be racist.
      • Kuinox 6y ago
        What is the difference between both for you ?
        • deleted 6y ago
          [deleted]
    • Kuinox 6y ago
      It's so much racist that this kind of things is illegal here in France
    • JumpCrisscross 6y ago
      > How is that racist? One's ability to participate is dependent on the program sponsor's determination of your race.
    • dang 6y ago
      Please don't break the site guidelines by replying to comments like that one. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
• Avalaxy 6y ago
  How much time and money did you spend building the MVP? How did you validate it?
  • eries 6y ago
    We have raised on the order of $90M so far. It cost us almost $20M to get to the initial regulatory approval I’ve answered about MVPs elsewhere in this thread but a big part of what made this possible is our superior cost structure due to being a software-native company Validation I’ll have to answer a little later, once we make a little more progress
• mazspork 6y ago
  How often can you trade? Once a day (at the same time)? As you like?
  • eries 6y ago
    We are a RegNMS complaint exchange which means we don’t restrict trading or liquidity. We have found ways to make our reforms effective without having to go there
• calvinmorrison 6y ago
  I don't understand from the website this bit which is about the "Long-Term Stakeholder Policy". What was the motivation for adding specific fields to this policy regarding diversity, the environment, and employee retention strategies? are these just examples? - The company’s impact on the environment and its community - The company’s approach to diversity and inclusion - The company’s approach to investing in its employees
  • eries 6y ago
    We wanted to make it explicit that these issues must be addressed in the stakeholder policy. Mostly we did this to create clarity for the regulators as to where such disclosures will live. This language mirrors other SEC-approved rules, but with stronger disclosure requirements here It’s not meant to be an exhaustive list
  • vertbhrtn 6y ago
    It's a gov policy, really: companies get special status, i.e. smaller taxes, if such and such criteria are met.
• dangerface 6y ago
  > adopt corporate governance that aligns their behavior and incentives to the long term. What does this mean? What quantitive measures are you using to qualify long term incentives and behaviours? No offence but you don't seem to have an answer to this question. For example is RDSA long term? They have been around for ever and people will need cars and oils for the forseable future at least 10 years is this long term? What happens when the oil runs out / global warming / move to electric cars is it still long term and how long will that term end? I need qualitative facts and figures before investing. I buy stocks that provide value to people in a way thats scaleable and I have fixed time periods for when I expect investments to return like 5 years or 10 years. When some one can't talk about the value their service provides and use loose terms like "long term" how long is long? This is an easy pass for me.
  • eries 6y ago
    Leaving aside some of your odd claims, I’m happy to answer the question. Our definitions and standards are laid out in excruciating detail in our hundreds of pages of legal filings. Here’s a good place to start if you are interested: https://www.sec.gov/rules/sro/ltse/2019/34-86327.pdf https://www.sec.gov/rules/sro/ltse/2019/34-86327.pdf Also this may be of some interest: https://longtermstockexchange.com/static/principals_for_lt_success_white_paper-52e153e1e0be49bd178f74475f274ef0.pdf https://longtermstockexchange.com/static/principals_for_lt_s...
    • rytill 6y ago
      You don’t have any key ideas that you can express without linking to “hundreds of pages of legal filings”? His claims are not odd at all, you really haven’t put any effort into distilling the incentive design. It’s not impossible to express complex incentive design or push readers in the right direction to understand this. What is the essence of what is quantitatively or contractually different about LTSE?
      • terminalcommand 6y ago
        The first link seems to be a 14-page memo and the second link a 28-page marketing document. As someone who writes these docs for a living, don't be afraid to read the legal stuff. It's just text.
• dfscarter1 6y ago
  When will you see the first companies list and how do I invest in these companies
• GuB-42 6y ago
  I'm wondering if "stability warrants" could help promoting long term goals over runaway speculation. This is a financial product available on the CAC40 index which pays off if the index value stays within a certain range.
  • eries 6y ago
    Curious to learn more about how this might work
• elamje 6y ago
  Eric, what are some companies you’d be happy to list on your exchange? Both IPO and older companies already listed elsewhere.
• shireboy 6y ago
  How can an average investor buy stocks on this exchange? Will they be available in regular stock brokerages?
  • eries 6y ago
    Yes, all of our listed securities will be available in regular brokerages. If your current broker allows it, you can even ask them to direct trades to LTSE as opposed to another exchange. Although most retail brokerages do not allow customers do specify this, a few do.
• mabbo 6y ago
  Do you think you'll see something like "ethical index funds" that index your exchange, and sell themselves to customers based on the rules of your exchange? And if so, when can I buy in?
  • eries 6y ago
    Yes, I hope so. I think if and when that happens, it'll be pretty big news. I don't think you'll miss it. (But I guess you could subscribe to our newsletter in the meantime... https://ltse.com https://ltse.com at the bottom of the page)
• dakial1 6y ago
  What is your view on the whole Derivatives issue? Because they seem to be very problematic as it seems that a small part of it is really used for useful business objectives (like hedging) but the vast majority of them is used as plain, bubble generating, gambling in the markets (as the subprime chaos in 2008). Will LTSE address this issue in any way?
  • eries 6y ago
    Yes, but I don't have anything to announce at this time.
    • dakial1 6y ago
      Good. Now I'm curious.
• qwertox 6y ago
  Wow, it sure was pretty hard to find the street address, and this was in a context which makes it look like you were legally forced to publish it. Don't you want people to know where you're located at?
• deleted 6y ago
  [deleted]
• baccredited 6y ago
  Many private companies are staying private for longer, with an average time from launch to IPO creeping up toward 10 years or more. Most unaccredited investors are missing all of those substantial early gains. Does LTSE have any plans to help speed the path to IPO and let more unaccredited investors participate in early growth and success?
  • eries 6y ago
    It is my hope that we will be able to reverse this trend by making the experience of being a public company dramatically better. It will take time to see this play out, just as it has taken time for us to get into this mess. But in the long run, it's important that the broad public be allowed to participate in growth investments, and I think the public markets could once again be the best place to enable that to happen. Frankly, I think it's immoral that at a time in history when we are pushing more and more of the responsibility for people's retirement onto individual savers, we have also made it illegal for them to make most growth investments. If we don't correct this imbalance, I fear the backlash to tech will only worse and intensify. Tech didn't cause this problem but we will bear the brunt of the backlash if people feel left behind.
    • webmaven 6y ago
      So, do you anticipate startups being able to IPO on LTSE at some point?
• libraryatnight 6y ago
  This feels... not open. Click around the site, can't find anything useful just manifestos and principles. I really hate when startups do this. You're not "open for business" you're open to being in business. If you tell me you've started an exchange, you're open when there's listings and people can trade.
  • eries 6y ago
    Good point: https://markets.cboe.com/us/equities/market_share/ https://markets.cboe.com/us/equities/market_share/
    • newbie789 6y ago
      I am kind of confused. Does this site have a list of the actual listings? Maybe I'm not navigating this cboe site correctly but that just looks like some numbers. Edit: For example if I wanted to invest in a business through LTSE today, is cboe how I would do so? What would my order flow look like?
      • bmcahren 6y ago
        I think you and I would need to lean on a Robinhood to do that. You can't walk up to NASDAQ / NYSE and perform a trade direct you need a broker.
        • newbie789 6y ago
          Oh, I didn't know that this was on Robinhood! I can't find it at the moment but I'm not an experienced investor and not particularly savvy when it comes to the service. (I've got less than $5 on the app.) It's correct that you can't just walk up to NASDAQ and make a trade, but I can find some information about what companies are listed there easily on their website. As far as I can tell, "open for business" kind of looks like "We've finished our copy about our ideals and goals and put it on a webpage" in this case. I could be wrong or just totally missing the point but I still don't know what is listed or how to engage with it. Is it normal not to provide that information as a stock exchange?
• peterthehacker 6y ago
  Congrats! I agree that this is a very important problem to solve. Can you elaborate on some of the specifics of how LTSE will incentive investors to think long-term? I’m imagining some strict trading frequency limits. Like an inventor can only trade a specific stock once a year. Do I have the right idea?
  • eries 6y ago
    No, what you are describing is not currently legal in the US. We have to allow the stocks listed on LTSE to trade freely across the entire "National Market System" which includes dark pools and incumbent legacy exchanges. So in order to solve this problem we have to start with corporate governance. Remember, though, that shares of stock are not actually commodities. They are contracts and the rights and responsibilities of stockholding emanate from the corporate charter. So as we are able to encode protections and requirements there, they will follow the stock wherever it trades. Through this mechanism, much reform is possible both today and in the future.
• minimax 6y ago
  Why did you feel the need to support trading of non-LTSE listed names on the LTSE? Are there novel order types or other trading mechanics coming down the pipe?
  • eries 6y ago
    Just the opposite, we adopted a set of rules that we call the Very Simple Market (tm) (yes really). We have reduced the types of orders and removed all hidden liquidity. This isn't the best trading venue for all kinds of traders, but we do believe it is superior for certain investors who have a long-term orientation.
• mcculley 6y ago
  How is "long term" defined? The website talks about decades but does not make that clear. Isn't every investment ultimately measured against a 30 year U.S. Treasury bond? Will the LTSE incentivize longer term investments?
• jovial_cavalier 6y ago
  Are there any incentive systems in place to ensure that companies being traded on your exchange don't take part in these destructive practices, or is it simply that they agreed to your policies? If it's the latter, I don't see why a company would opt to be traded on your exchange if they get literally nothing in return other than good boy points. I also don't understand why this is a problem you are tackling at the exchange level if you aren't changing how the exchange works.
  • eries 6y ago
    Yes, there are incentives. But I object to your characterization of doing the right thing as "good boy points." Acting ethically and treating people right is its own reward _and also_ has been repeatedly shown to lead to outperformance. Our exchange works differently than the legacy players, so I don't really understand your last point.
    • ajani 6y ago
      The question still holds, which you didn’t really answer: Are there any incentive systems in place to ensure that companies being traded on your exchange don't take part in these destructive practices, or is it simply that they agreed to your policies? What are the incentives and how do you hold a company to a long term orientation. A company is free to choose and change its vision/strategy as time goes by. Do they get delisted if they move away from this orientation. How do you measure such an intangible and act on it?
    • jovial_cavalier 6y ago
      >Acting ethically and treating people right is its own reward _and also_ has been repeatedly shown to lead to outperformance. If that's the case, then what does your exchange add? I think we are in agreement about these principles, but I don't understand how your exchange is encouraging them. Better than just encouraging people to agree to these practices is if you could set up a competitive landscape where they are more directly rewarded than in the current paradigm. That is primarily how I see an alternative exchange contributing to this cause. >Our exchange works differently than the legacy players, so I don't really understand your last point. This is the central contention. I don't understand how you are different from legacy players. What is the actual concrete difference in how you operate as an exchange that differs from your competitors? Furthermore, how do you expect that to lead to less short-term rent seeking?
• dfabulich 6y ago
  How would I buy a share of a company on LTSE today? Does any major online brokerage work with LTSE?
  • joshdance 6y ago
    Same question. How do I buy a share?
    • eries 6y ago
      Ask your broker. They are probably a member already.
      • bobenray 6y ago
        "Ask your broker" is so 1998.
        • virtue3 6y ago
          https://www.youtube.com/watch?v=2_ygqPepLjM https://www.youtube.com/watch?v=2_ygqPepLjM :D
        • SkyMarshal 6y ago
          Not really. In general exchanges don't sell directly to the public, they interface with brokers both human (1998) and electronic (2020), who sell shares to the public. "Ask your broker" means call them up if that's the kind of broker you use, or check out their website FAQ on order routing if you use an electronic one.
  • eries 6y ago
    Yes, the major broker-dealers and market makers are members of the exchange. You can route orders to LTSE via your existing broker, just call them up and ask them to do so. I believe Interactive Brokers, in particular, extends this privilege to all of their retail customers. But I don't have first-hand knowledge of this, just what I've heard.
• aninditaghosh 6y ago
  Great initiative! how do you plan to attract buyers and sellers to create a meaningful and transparent exchange.
• aninditaghosh 6y ago
  Great Initiative ! How do you plan to attract buyers and sellers for transparent exchange?
• mikorym 6y ago
  > The objective was to create a public market designed for trading the stocks of companies organized to sustain long-term thinking. I'm sorry, but this doesn't seem to be clear at all to me. Take the subset of investors that don't trade daily, or monthly, or, even yearly. There you have your long-term thinkers. And it's a large subset, make no mistake. Also, LTSE? That's suspiciously close to LSE. I'm not being a detractor here, just asking the obvious.
• mmhsieh 6y ago
  how do you handle M&As when companies are absorbed by other companies that don't live by the charter? grace period, or are they just dropped?
  • eries 6y ago
    Same as any other exchange. The new entity will either have to meet the listing standards or be de-listed.
• nartz 6y ago
  Just an idea - put a link to longtermstockexchange.com into your blog post, preferably at the top, with how people can use or buy into it
• daniel-levin 6y ago
  Hi Eric, presumably the companies will trade on a limit order book, like other exchanges. This mechanism of price formation allows rapid price movements up or down. What’s to stop the speculators or retail investor hordes from piling into a stock and driving its price up or down? Are there holding period rules?
  • eries 6y ago
    No, we do not restrict liquidity in any way. We simply believe that companies should be able to engage with "speculators" as you call them differently from long-term investors. Ultimately volatility isn't a problem in itself - it's the effect it has on corporate decision-making that matters.
• someelephant 6y ago
  If you want long term thinking, pay packages for executives should take that into account. This can be done regardless of exchange.
  • eries 6y ago
    Agreed. our standards require this
• Animats 6y ago
  Oh, it's mostly a statement of principles to which a company can sign up. More like a "public benefit corporation". Are these binding? How are they enforced? I was expecting some kind of exchange designed for lower volatility. There have been exchanges proposed where prices only change once a minute, or something like that, to stop high frequency trading. But this isn't one of them. Warren Buffett has proposed that any capital gain over a period less than a year be taxed at 100%, to force a buy and hold strategy. Not seeing any of that here.
  • JumpCrisscross 6y ago
    > Warren Buffett has proposed that any capital gain over a period less than a year be taxed at 100%, to force a buy and hold strategy Well yes, anyone with ample liquidity would love this. Anyone needing short-term liquidity would be price indifferent between their acquisition price and the market price. Liquidity providers would make bank.
  • eries 6y ago
    There are many ways to address volatility, and - more importantly - the corporate dysfunctions that volatility can enable. We are working on research that will show that the reforms we advocate with are linked to lower volatility. In terms of the principles, we advocate for principle-based listing standards which are indeed binding and enforceable. The details are enumerated in our public filings with the SEC and on our website.
• mail2vks 6y ago
  There were a few transactions which got completed today. Who is buying and What are they buying ? Source : https://markets.cboe.com/us/equities/market_statistics/venue/longtermstockexchange/all_market/ https://markets.cboe.com/us/equities/market_statistics/venue...
• polskibus 6y ago
  Please compare LTSE to IEX, why is LTSE better?
• 11thEarlOfMar 6y ago
  The entire trading industry is formed around the public markets. Large financial firms, both in accounting and investing depend on revenue from the quarterly reporting. I'd expect a tremendous amount of resistance to moving companies to LTSE. Do you expect that any firms will transfer? Or do you expect a new ecosystem to develop side by side, over time?
  • eries 6y ago
    We have indeed seen quite a bit of resistance, as you say. I kind of think of it as carving the grand canyon with water and gravity. With sufficient time, determination, and patience, you can make remarkable things happen. We've been able to win over many former skeptics to become allies over the years. I can't predict the future. I know there are existing public companies for whom this would be a great fit. Can they overcome the inertia and bureaucracy that tends to set in once you go public enough to make a farsighted bet like this? Or will it be up to the next generation of corporate leaders to act with boldness? Time will tell.
  • Applejinx 6y ago
    It seems to me that defining this space could be admirable foresight in the (perhaps unlikely?) event that government begins to deal more fiercely with the known abuses of big business and the stock market. (and that, is a potential argument in its own right: let's postulate that there are people out there who consider this whole area pretty toxic) So, as things stand, the status quo is strongly reinforced, and being extremely toxic is strikingly rewarded. In the event that this never changes, there's not a lot of place for a Long-Term Stock Exchange or anything like it. That holds even while the status quo, being 'extractive', begins to do serious damage to all the stuff we like and care about. So long as the rules favor toxicity and are written by those who stand to gain by it, this proposal is a joke. But we are also postulating that there is reason to believe such 'extractive' behavior has consequences: call 'em externalities. There's plenty of history on how business can continue that way, even to the point of open warfare, murder of strikers etc. so we know there's motivation to cling to 'extractive'. But history also tells us there's a limit, and societies can turn against this sort of thing in whatever form it shows itself. (side note: I spent part of yesterday trying to help Amazon not be toxic. I got an LED light being sold as a light therapy tool, $40 or so price but might only be a few bucks worth of LEDs, and I did not order it. Someone's using my name and address, with their own email and credit card, so they can review things as me. It was very tough to get the situation understood by Amazon. Yet, the product reviews had already been frozen for suspicion of fraudulent reviewing, and the product was fulfilled by Amazon and was literally #1 in its category. This is a form of toxicity that leads to Amazon's brand being garbage because you can't trust a thing they say.) In the event that government changes its approach and begins to deal more harshly with the abuses of big business, which is far from unthinkable, this Long-Term Stock Exchange and seeking to comply with it might be a useful form of virtue signaling by companies that are trying to avoid being targeted as bad actors. And the requirements of the LTSE could track the legal requirements by government as they develop, making the exchange a 'safe haven' and public show of good faith. The contrast with what you have to do to please current stock exchanges and those who follow them, could not be more striking. It's become very obvious that shows of BAD faith (by certain political standards) are required by the existing investor audience, which seems correct in believing that right now companies are held to no consequence other than beating other companies in making money by any means, full stop. If that IS stopped, the meta-market (market of money holders seeking markets) would be hot to find a place to invest that was more safe from unwanted consequence.
• itsoktocry 6y ago
  This seems like a wonderful idea that the world needs. But until I can see a list of companies that are "accepted", it's hard to know if it's all just lip service. There are a few companies in the tech sphere I can think of off the top of my head that many consider "long term thinkers" that others would consider nothing of the sort.
  • eries 6y ago
    I'm as curious as you are to see what happens next...
  • aisofteng 6y ago
    I think IBM is one.
• coderintherye 6y ago
  Confused? I'd highly suggest listening to the talk by Eric on this LTSE: https://www.youtube.com/watch?v=BvaAYpP691Y https://www.youtube.com/watch?v=BvaAYpP691Y And congrats Eric on getting to this point, I know it's been a long road!
  • eries 6y ago
    Thank you!
• hitpointdrew 6y ago
  Seems really cool, but after being on your site for 10 min I have yet to find the "meat". Other than a vague reference to "through member broker-dealers". For me the info I am interested in, and would want to see featured most prominently, is 1) A list of companies on the exchange and their last closing price. 2) An option (even if through a third party) to purchase shares of companies listed on LTSE. This information is no where to be found.
  • eries 6y ago
    Today's announcement doesn't pertain to listings, so 1) is a ways off still You can do 2) through your existing broker, so long as they are a member of the LTSE, which they likely already are. You can check their membership status here: https://brokercheck.finra.org/ https://brokercheck.finra.org/
    • Bedon292 6y ago
      I honestly cannot figure out how to use this site to see if my broker, or any broker for that matter, is a member of LTSE. Would you be able to provide an example?
      • eries 6y ago
        Sure. Here's Citadel's profile from FINRA: https://files.brokercheck.finra.org/firm/firm_116797.pdf https://files.brokercheck.finra.org/firm/firm_116797.pdf Scroll down to page 9, you'll see they are a member of The Long-Term Stock Exchange
        • petr_tik 6y ago
          Citadel securities are famous for their long-term investment horizons. 100 milliseconds is practically an eternity
          • Schiendelman 6y ago
            For an android!
• hammock 6y ago
  @eries Isn't this a raw deal for executives and potential executives of listed companies? It introduces new corporate governance rules (no short-term incentives, buybacks, etc) without alleviating the existing regulatory burden of quarterly filings, GAAP, etc.
  • eries 6y ago
    if a company's executives feel like gaining outperformance by doing extra work isn't a good deal, maybe don't invest in that company? I'm not an expert, but I do play one on TV sometimes
    • hammock 6y ago
      Fixed the typos. Yeah that's kind of my point. You are going to have less interest from investors - but not only that you will have less interest from boards or executives. What's the advantage of being listed on the LTSE, if all I get are more rules? It's a neat option for investors, but there's two sides to every market. What does it offer that a long-term-conscious board couldn't implement themselves? I can't say "I'm starting a food truck which will sell popsicles that don't melt even in the face of great heat. Sure the suppliers have to put in a little extra work to make sure they don't melt, but you as a buyer will benefit" - that doesn't really work unless there is a path for those popsicles to be created and offered for sale in a way that makes sense for the supplier.
• natcombs 6y ago
  Congrats Eric! I've been excited about this since your original announcement. I'm hoping that you'll offer an index fund to make it for passive investors (and dollar cost averaging) to put more money in this exchange, with less effort, and push the wall street incentives toward longer term.
  • eries 6y ago
    good idea
• obi-wan 6y ago
  How did you decide on your first early hires and how did you convince them ?
• studpeace 6y ago
  If you're starting I think you should read the lean startup
• cwkoss 6y ago
  Having a hard time groking what exactly LTSE does differently. What are the specific features/differences between LTSE and other markets? Will companies listed on LTSE be listed exclusively there, or also on other markets?
  • eries 6y ago
    I've posted links elsewhere in this thread to the exact points of differentiation. You can even read the legal filings, if you are so inclined. We support (and encourage) dual-listing, so that a company can still benefit from our protections while accessing liquidity at the open/close from a legacy exchange.
    • om2 6y ago
      What protections do you provide for companies?
• TheMagicHorsey 6y ago
  If you have a long term view on business, you can actually just use the existing stock exchanges. The stock exchanges aren't the reason for short term thinking ... the incentives of executives and investors are the reason for that. There's plenty of companies that take the long view and whose investors have been rewarded for it ... Amazon, Netflix, Tesla, etc. ... its not like the existing stock exchanges and investors have stopped them from running a loss and investing in the long term. I feel this is a solution that isn't aimed at the right part of the "stack". Reform is needed in the way the professional management of large public funds and pension funds are evaluated and compensated ... but you won't solve that with a new stock exchange.
• vardan_k 6y ago
  My understanding is that the market cap of a company listed at LTSE will be far less than of the same company listed at NYSE or NASDAQ since there will not be a as much interest by both many institutional and retail investors. Is my understanding correct?
  • eries 6y ago
    Definitely not
    • maxk42 6y ago
      You can't just say "Definitely not" and leave it at that. You have to explain why or you come off as a huckster.
      • eries 6y ago
        I'm happy to clarify further. There is nothing in the summary above that is accurate so I wasn't sure what else to say. Please feel free to ask followup questions, I'll do my best to get to them today
    • vardan_k 6y ago
      Would you please elaborate. Because I think that if the investor is discouraged to be flexible about its positions it will not be encouraged to invest in that particular business.
    • vardan_k 6y ago
      To me the whole concept of LTSE feels like this. The listed companies say to the investors "we want your money, but you know what you should just seat tight". I don't think that's gonna work. But whatever, I'm just a lawyer :D
• unemphysbro 6y ago
  I always thought that the LTSE would be an excellent crypto/ICO use-case.
• singwhenurdown 6y ago
  I haven't read every comment here but is this a direct repeal to the common business logic: "do what increases the shareholder's profits"?. i.e. moving business focus away from pure profit and onto values that benefit the greater good (environmentalism, diversity, etc.)
• jbhatab 6y ago
  This is one of my top 5 underrated ideas that I'm so excited to see launch. This could redefine the relationship between investors/founders/operators which is clearly driven by quarterly financials. Then go listen to how people like Jeff Bezos think about building strong companies. Clear misalignment. You have to be so strong as a founder that you can resist the urges of the market to think long term. Excited and hopeful that LTSE might make that type of thinking engrained in all businesses!! Just might take building a stock market to get there :P (which is an incredible feat)
  • eries 6y ago
    thank you!
  • ricardobeat 6y ago
    According to this comment https://news.ycombinator.com/item?id=24423448 https://news.ycombinator.com/item?id=24423448 there is nothing they can do about quarterly reporting, so unfortunately the shift in thinking will have to happen under existing regulations. My understanding of this is quite limited at the moment but I'm curious to learn how and why companies would benefit from signing up for the LTSE and what effect it will have in practice. There are requirements such as a "Long-term Strategy Policy" but it seems like pretty much a leap of faith / honor system for the company to upload the principles.
    • eries 6y ago
      Each principle requires a corresponding policy enactment / which must be verifiable and enforceable
• BigPictures 6y ago
  Like many people here, I’ve been wondering for a long time how they are planning on keeping companies focussed on the long term. Here is a summary that is shorter than the SEC filings. https://longtermstockexchange.com/listings https://longtermstockexchange.com/listings
• xwdv 6y ago
  Will the long term stock exchange feature any kind of derivatives?
• jimbob45 6y ago
  Small brain: Link your site, get DDOS’d Big brain: Link your blog explaining your site, main site is unaffected by DDOS Galaxy brain: Link your blog explaining your site hosted by a 3rd party. No DDOS. Nice work, everyone.
• hevelvarik 6y ago
  Great, creating an equity exchange is a heavy endeavor and I’ve seen no more than a couple of medium posts which speak only to the problem but nothing towards your solution. I’m definitely missing something; where’s the beef? Is there something of your solution that we can read?
  • eries 6y ago
    Sure. All of the details are available in public filings and on our website. You might start here: https://longtermstockexchange.com/listings https://longtermstockexchange.com/listings or here: https://longtermstockexchange.com/static/principals_for_lt_success_white_paper-52e153e1e0be49bd178f74475f274ef0.pdf https://longtermstockexchange.com/static/principals_for_lt_s... or here: https://www.sec.gov/rules/sro/ltse/2019/34-86327.pdf https://www.sec.gov/rules/sro/ltse/2019/34-86327.pdf
• vinayp10 6y ago
  How is this different to equitybee.com or carat.com?
• yellowbanana 6y ago
  What are the benefits for a company to list here? What are the current examples of company that exists now that fit that ideal long-term vision?
  • technocratius 6y ago
    I expect they'll find capital from investors/shareholders there that will be less activistic in periods of short-lasting economic underperformance
    • deleted 6y ago
      [deleted]
    • yellowbanana 6y ago
      Are they going to limit the volum of the transactions, or it's trusting the investors. It would be better if they gave more details on it.
• leptoniscool 6y ago
  It can be argued that long-term thinking is already part of the current market structure, for example take Amazon or Tesla which trades at extraordinary PE ratios. In essence investors are betting in the far future these companies will make money. How does the long term stock exchange differ?
  • nthnclrk 6y ago
    I’m clearly not Eric, but you’ve only addressed the investor side here. Looks to me LTSE is trying to create a forcing function, primarily through governance, for companies to think and act long-term.
  • rayshan 6y ago
    How would companies live up to the long-term expectations? Who's holding them accountable? What's the investor's discovery mechanism for more long-term oriented companies? These are some of the things we think about.
• jyz 6y ago
  @eries any plans/timeline to list LTSE on LTSE? Also any additional thoughts on the index fund proposal described by a few here: would you want to include existing public companies or only completely brand new LTSE listed companies? Thanks
• matthewfelgate 6y ago
  Not all good ideas make good businesses.
• haeli05 6y ago
  What are the listing fees and procedures? Are you similarly regulated to NYSE? Can smaller startups and Reg D List?
  • eries 6y ago
    Yes, similar to NYSE and NASDAQ. All of our exchange fees are regulated: https://www.sec.gov/rules/sro/ltse.htm https://www.sec.gov/rules/sro/ltse.htm
• antifra 6y ago
  are there already companies on the pipeline for the IPO on LTSE?
• helan 6y ago
  Are you explicitly banning traders from trading? For example requiring you have to wait x months from purchase date before you can sell your shares.
  • eries 6y ago
    No, that's not legal under US law at this time
  • smabie 6y ago
    That's a really bad idea. If that was a rule, there would be no liquidity at all as no market maker would touch it. Also shorting would become too risky.
• helan 6y ago
  How can you enforce long term holding without explicitly banning shareholders from selling within an x month period of purchase date? I think it should be a law that you have to wait like 6 months before you can sell a stock... that would eliminate ALL traders and craziness in the markets.
• Invictus0 6y ago
  I want to support this but man is this a botched launch. If your blogpost is so low on details that you have to spend hours answering the same questions over and over in the comments, then maybe you should write a better blog post. It feels like I've just visited a "we are under construction" website; I still have no idea what this is or what it does or what I'm supposed to do.
• ryanjodonnell 6y ago
  What's the smallest a company can be to consider being listed on LTSE?
• om2 6y ago
  The blog post doesn’t explain what, if anything, is different about how the market works. From the name, I expected that it would require holding an investment for a minimum period. But I see no evidence of that elsewhere on the site. I do see listing requirements that supposedly require companies to have a long term focus. But then elsewhere I see that all securities in the S&P 500 and the RUSSEL 2000 index will be included. So I’m very confused? What even is this thing? Did I miss a concise explanation somewhere?
  • lappa 6y ago
    IMO, the main difference between LTSE and a traditional stock exchange is the way votes are allocated to shareholders. Traditionally voting power is proportional to shares owned. However, on LTSE the amount of time a stock has been held is also considered. There is no minimum holding period, but there is an incentive to hold. A bit of a tangent: Since there is a premium in voting rights (GOOG vs GOOGL), I'm curious to see how this new voting structure might result in strange behavior by traders and investors. For example, will people use single stock futures to hedge while retaining their voting rights? Will special purpose vehicles for holding shares be created?
    • valuearb 6y ago
      < Traditionally voting power is proportional to shares owned. However, on LTSE the amount of time a stock has been held is also considered. This seems problematic. The longer you hold your stock the more voting rights and hence value it accrues. But if you sell the shares all the accrued value is lost. So it surely leads to proxy voting, where former owners still are registered as owners of their former shares, but vote them for whoever they secretly sold the shares to.
      • tlholaday 6y ago
        The loss of accrued value is a disincentive to sell, and sell-disincentives are a feature, not a big.
        • 6y ago
• woshea901 6y ago
  When will the LTSE be open for investors to buy shares? Will focus be on institutional investors or retail?
• bricemo 6y ago
  Let me try to summarize everyone’s same question: - The idea of a stock exchange that allows companies and investors to focus on 5, 10, 25 year horizons sounds great! - However companies on normal stock exchanges now already try to do this, but it’s hard because of quarterly earnings, pressure for quarterly growth, etc - How is LTSE different? Seems like: Companies and investors “promise” to have a longer term focus via planning - seems like that wouldn’t be enough and the same financial pressures would result in the same focus - We were expecting something like: “investors must hold positions for 10 years”, or, “earnings only reported every 2 years”, etc etc. but there’s nothing like that. - So, what is the big idea, the teeth, the new rule, that makes long term focus enforceable?
  • AmericanChopper 6y ago
    > The idea of a stock exchange that allows companies and investors to focus on 5, 10, 25 year horizons sounds great! But this already exists. It's just the regular stock exchange. It's also worth noting that a majority of the capital in the market is already focused on very long term horizons. Most of it is sitting in boring mutual funds, who's investors are looking towards retirement as their horizon. If you're looking for a market that is so focused on long term horizons that they don't even care whether you have enough revenue to remain solvent, and won't have enough revenue to remain solvent at any time in the foreseeable future, then that market already exists too. You can call it Private Equity, or Venture Capital, and HN often likes to discuss how it's trying to reinvent the 2000s tech bubble. It's also led to some incredible scams, and isn't really something you want consumer investors betting their retirements on. > something like: “investors must hold positions for 10 years”, or, “earnings only reported every 2 years” These wouldn't be good rules even if you were focused exclusively on long term results. Your longterm outlook can change from one day to the next.
    • unityByFreedom 6y ago
      If you want long term focus, invest in an index. No single company can weather every storm. Sometimes they need short term focus to survive in the long term.
• valuearb 6y ago
  The real solution for better aligning corporate incentives with long term investing is to reform the public company board structure. The problem is current public boards are controlled by insiders, both C suite execs and entrenched board members, which leads to insular self dealing. Every CEO over time pollutes the board with their cronies to maintain their power base. The solution is simple, allow shareholders to propose board slates. That guts the power of insiders to control the company, but the SEC has never had cajones to make it happen.
• GlennS 6y ago
  I think something like this might be more useful outside the USA. Publicly traded companies in the USA already re-invest quite a large chunk of their profits for future growth, where companies in other countries would tend to pay out larger dividends.
• liamcardenas 6y ago
  Why not just create a template for corporate bylaws that you can certify, like a B-Corp? An LT-Corp, if you will. If you aren’t implementing any exchange-level mechanisms, why does this need to be an exchange at all?
• WalterBright 6y ago
  This short-term-pervades-the-market is based on the idea that the current stockholders are able to trick future stockholders into buying stocks that have eaten their seed corn, before those future stockholders realize this. How can this process of continually tricking the next investor possibly work out quarter after quarter? Wouldn't the stock market have tanked long ago if this was, in fact, underlying the bulk of the market valuations? The reality must be, as soon as investors realize a company is short-term only, they dump and run from its stock, because they will be unable to trick someone else into buying it at the high price. Some years ago, I knew the CEO of a company who said he did the financials "according to what Wall Street short term investors wanted". The stock promptly tanked as investors actually do not invest that way, and certainly don't want to invest in companies that eat their seed corn. Take a look at the companies with the biggest market caps in the world - who thinks they are driven by short-term thinking? I don't. The investors obviously don't. And the rewards of long-term thinking are off the charts.
  • pirocks 6y ago
    >How can this process of continually tricking the next investor possibly work out quarter after quarter? I imagine that if the next investor was someone like a retirement fund this could work out pretty well, since they have a steady flow of money being paid in. I don't know to what extent that actually happens.
    • WalterBright 6y ago
      Retirement funds lose their investors if they do poorly.
  • bumby 6y ago
    If short term investing wasn’t valuable why would real estate closest to the stock exchange be priced higher simply because it enables HFT to shave milliseconds of execution time?
    • WalterBright 6y ago
      I meant short term being the notion that companies are sacrificing long term growth for the next quarter's results.
• mastazi 6y ago
  Non-Medium article about the same topic: https://ltse.com/articles/the-long-term-stock-exchange-goes-live https://ltse.com/articles/the-long-term-stock-exchange-goes-...
• creeble 6y ago
  There is no need for a long-term stock exchange. If you want to encourage long-term investing, "all you need to do" is change investment taxation. Equities held for less than a minute? 100% tax. A year? 20%, like the US today. Five or ten years? Zero. Boom, HFT gone, and a sudden rise in long-term investing. But the devil's in the details, in this case the length and shape of the curve.
  • mlrtime 6y ago
    This would discourage market makers form entering the market, increasing spreads and investors would pay more to execute.
• heimatau 6y ago
  I'm wondering a few things: 1. Can we do a direct stock listing? 2. How much equity needs to be offered? 3. Is there a minimum valuation that needs to be met to be listed? 4. What are the fees to be listed?