4 ms·

this is a symptom of the short-termism in equity markets that we get from abstracting ownership away from involvement. it's a direct consequence that such marke

this is a symptom of the short-termism in equity markets that we get from abstracting ownership away from involvement. it's a direct consequence that such markets become centers of gambling rather than long-term interest, because otherwise your focus would be on growing your main source of equity, rather than spraying and praying. it's also why we should be wary of anyone spouting "markets provide liquidity" dogmatically. equity markets do provide liquidity, but only a trickle is needed for a well-functioning market, but the gamblers (traders, brokers, etc.) propel a tsunami of liquidity[0], because that's what benefits the gambling mechanics. we should leave gambling to casinos and let equity markets be about involved ownership. i'd made a related point yesterday about each person having one appreciating asset to nuture is great, but not having many: https://news.ycombinator.com/item?id=31573993 https://news.ycombinator.com/item?id=31573993 . [0]: a similar phenomenon occurs in real estate, where only a trickle is needed, but brokers/agents try to drive sales past the natural equilibrium for their own benefit, and not the market's.

itsoktocry 4y ago
>this is a symptom of the short-termism in equity markets that we get from abstracting ownership away from involvement. Except this is explicitly talking about private markets. You know, those places that VCs and people like Elon Musk claim companies need to be to avoid "short-termism" of public markets and have ownership be rewarded. The reality is these money men want to be private so they never have to mark-to-market. The public markets enforce that.
- clairity 4y ago
  yes, you're right. i misread the title and didn't originally read the article because it was behind a paywall, but just saw the archive link and read through it now. i think a similar dynamic happens in PE though, which is a private market, but a very large one, so not like the illiquid, opaque private markets we'd otherwise imagine. PE firms try to inflate valuations and get out while leaving others holding the bag (i.e., take the inflated risks and therefore take the eventual losses).

itsoktocry 4y ago

>this is a symptom of the short-termism in equity markets that we get from abstracting ownership away from involvement. Except this is explicitly talking about private markets. You know, those places that VCs and people like Elon Musk claim companies need to be to avoid "short-termism" of public markets and have ownership be rewarded. The reality is these money men want to be private so they never have to mark-to-market. The public markets enforce that.

clairity 4y ago
yes, you're right. i misread the title and didn't originally read the article because it was behind a paywall, but just saw the archive link and read through it now. i think a similar dynamic happens in PE though, which is a private market, but a very large one, so not like the illiquid, opaque private markets we'd otherwise imagine. PE firms try to inflate valuations and get out while leaving others holding the bag (i.e., take the inflated risks and therefore take the eventual losses).