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Do you really still believe that? What if you have friends that control significant portions of the investment in the markets and you can get "bailed" out with

Do you really still believe that? What if you have friends that control significant portions of the investment in the markets and you can get "bailed" out with those relations?

SpicyLemonZest 4y ago
I have no doubt that some people find it easier to get money than others. But there's a lot of high-profile failures, most recently WeWork, which pretty clearly show that having lots of friends in powerful financial institutions isn't sufficient to get the public market valuation your investors want.
- lumost 4y ago
  Wework and Uber are still chugging along. If all deals flow through a few hands, then the price can quickly become “whatever we say it is”. Savers must invest.
  - SpicyLemonZest 4y ago
    But in public markets all deals don't flow through a few hands. That's why Wework could not, in fact, make the price become "whatever we say it is" - they're currently down 85% from IPO and 98% from the valuation they and their bankers originally pitched. (Uber's not quite so far down from their IPO, which I assume from your comment you'd argue is due to some kind of trickery, but is it impossible that there's just a lot of people out there who honestly think Uber has a good business?)
    - lumost 4y ago
      My understanding of the wework debaucle is that it ultimately came down to the s-1 filing. The s-1 was so poorly reviewed that it raised questions with the LPs and others that it blocked the IPO. On the other hand, Uber still loses >1.2 billion per quarter on a 13 year old business. It’s unclear if this trajectory will ever change - but their stock goes up when they lose more money. There is no guarantee that the markets choose to value profits in the future… which begs many questions.
      - SpicyLemonZest 4y ago
        The primary purpose of an S-1 filing is for investors to read to the prospectus and decide whether they'd like to invest. When a bunch of investors read it and say "no I would not", that's not a lucky catch, it's the system working as designed. I tend to agree that it's unclear if Uber's trajectory will ever change, which is why their stock is down 37% from IPO and over 50% from its all time high. But it's not unheard of for a company to be unprofitable for a long time until it starts pulling in billions, so it's not surprising that some people honestly believe Uber will pull it off.
        lumost 4y ago
        aye - however I'd imagine if Jamie Dimon wrote the S-1 it would have gone through at the original valuation. The core claim of the investors was ultimately that WeWork would be the primary demand aggregator for commercial real estate - giving it extreme leverage over landlords and tenants. The second component for the claim was that WeWork would make commercial real estate business's look better on paper if they could have wework as a tenant, particularly if WeWork continued to take losses for multiple years. WeWork's business model was also somewhat unique in it's ability to handle higher interest rates in the future thanks to it's short-term leases. I can't imagine that Jamie Dimon and others couldn't have written the S-1 convincingly in 2019 when interest rates approximated 0. The problem was that the S-1 was not written for finance professionals, and made an investment in the vision appear foolish. On the other hand... Uber's was, and Uber was able to successfully IPO despite similarly dire financials.
jupp0r 4y ago
If you have friends that give you billions of dollars then that's fine, it's their money. If they do it with the intent of manipulating stock prices then it's obviously illegal. This isn't market inefficiency in either case.
danielmarkbruce 4y ago
Suggesting that someone is naive because they don't believe in a grand conspiracy is a bit much. The finance industry is full of smart hard working people trying to cut each others throats. The idea they are all conspiring together isn't realistic to folks who've spent time in it.

Do you really still believe that? What if you have friends that control significant portions of the investment in the markets and you can get "bailed" out with those relations?

SpicyLemonZest 4y ago

I have no doubt that some people find it easier to get money than others. But there's a lot of high-profile failures, most recently WeWork, which pretty clearly show that having lots of friends in powerful financial institutions isn't sufficient to get the public market valuation your investors want.

lumost 4y ago
Wework and Uber are still chugging along. If all deals flow through a few hands, then the price can quickly become “whatever we say it is”. Savers must invest.
- SpicyLemonZest 4y ago
  But in public markets all deals don't flow through a few hands. That's why Wework could not, in fact, make the price become "whatever we say it is" - they're currently down 85% from IPO and 98% from the valuation they and their bankers originally pitched. (Uber's not quite so far down from their IPO, which I assume from your comment you'd argue is due to some kind of trickery, but is it impossible that there's just a lot of people out there who honestly think Uber has a good business?)
  - lumost 4y ago
    My understanding of the wework debaucle is that it ultimately came down to the s-1 filing. The s-1 was so poorly reviewed that it raised questions with the LPs and others that it blocked the IPO. On the other hand, Uber still loses >1.2 billion per quarter on a 13 year old business. It’s unclear if this trajectory will ever change - but their stock goes up when they lose more money. There is no guarantee that the markets choose to value profits in the future… which begs many questions.
    - SpicyLemonZest 4y ago
      The primary purpose of an S-1 filing is for investors to read to the prospectus and decide whether they'd like to invest. When a bunch of investors read it and say "no I would not", that's not a lucky catch, it's the system working as designed. I tend to agree that it's unclear if Uber's trajectory will ever change, which is why their stock is down 37% from IPO and over 50% from its all time high. But it's not unheard of for a company to be unprofitable for a long time until it starts pulling in billions, so it's not surprising that some people honestly believe Uber will pull it off.
      - lumost 4y ago
        aye - however I'd imagine if Jamie Dimon wrote the S-1 it would have gone through at the original valuation. The core claim of the investors was ultimately that WeWork would be the primary demand aggregator for commercial real estate - giving it extreme leverage over landlords and tenants. The second component for the claim was that WeWork would make commercial real estate business's look better on paper if they could have wework as a tenant, particularly if WeWork continued to take losses for multiple years. WeWork's business model was also somewhat unique in it's ability to handle higher interest rates in the future thanks to it's short-term leases. I can't imagine that Jamie Dimon and others couldn't have written the S-1 convincingly in 2019 when interest rates approximated 0. The problem was that the S-1 was not written for finance professionals, and made an investment in the vision appear foolish. On the other hand... Uber's was, and Uber was able to successfully IPO despite similarly dire financials.

jupp0r 4y ago

If you have friends that give you billions of dollars then that's fine, it's their money. If they do it with the intent of manipulating stock prices then it's obviously illegal. This isn't market inefficiency in either case.

danielmarkbruce 4y ago

Suggesting that someone is naive because they don't believe in a grand conspiracy is a bit much. The finance industry is full of smart hard working people trying to cut each others throats. The idea they are all conspiring together isn't realistic to folks who've spent time in it.