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He isn't arguing firms are overvalued by a greater degree now relative to 1999. He's arguing that investments in private firms, which are far more popular now,

by eroo 12y ago

He isn't arguing firms are overvalued by a greater degree now relative to 1999. He's arguing that investments in private firms, which are far more popular now, are worse for small players due to their lack of liquidity. If things start going south in a private investment, a share holder may not be able to exit even at a large loss.

encoderer 12y ago
If things start going south in a public investment, a shareholder may not be able to exit that, either. The truth is, it's all about liquidity, and liquidity dries-up on the way down.
- eroo 12y ago
  Sure they can except in the most extreme corner cases. You an contrive situations in which it's difficult to sell stock on the NYSE or NASDAQ, but it's basically always quick and easy (e.g., you can move $100K of FB stock in seconds using your phone during just about any market hour and often even outside of them). That is definitely not true of private markets, at least at the moment.
  - encoderer 12y ago
    Next time the market is in melt-down mode -- like it was just beginning to be last October -- watch how wide the spread gets. Sure, if you're somebody willing to take any price in a fire sale you can get out of anything.
    - eroo 12y ago
      I'd consider that a corner case. And even then, it is possible to get something out. With private investments, that just may not be true or involves high ad hoc transaction costs. My original reply was intended to point out that what was the top article comment at the time completely missed the point. Cuban is arguing that severe liquidity restraints are bad, especially so for small time investors. For scenarios like you describe, public exchanges aren't perfect either, but they are very, very good at facilitating near-instantaneous liquidity and they strictly dominate the current set of private crowd funding vehicles.
austenallred 12y ago
He's assuming everything will go to zero. So while his post is about liquidity, he throws in "oh by the way all of tech will obviously come crashing down." Except for the tech companies he invested in, of course.

by eroo 12y ago

encoderer 12y ago

If things start going south in a public investment, a shareholder may not be able to exit that, either. The truth is, it's all about liquidity, and liquidity dries-up on the way down.

eroo 12y ago
Sure they can except in the most extreme corner cases. You an contrive situations in which it's difficult to sell stock on the NYSE or NASDAQ, but it's basically always quick and easy (e.g., you can move $100K of FB stock in seconds using your phone during just about any market hour and often even outside of them). That is definitely not true of private markets, at least at the moment.
- encoderer 12y ago
  Next time the market is in melt-down mode -- like it was just beginning to be last October -- watch how wide the spread gets. Sure, if you're somebody willing to take any price in a fire sale you can get out of anything.
  - eroo 12y ago
    I'd consider that a corner case. And even then, it is possible to get something out. With private investments, that just may not be true or involves high ad hoc transaction costs. My original reply was intended to point out that what was the top article comment at the time completely missed the point. Cuban is arguing that severe liquidity restraints are bad, especially so for small time investors. For scenarios like you describe, public exchanges aren't perfect either, but they are very, very good at facilitating near-instantaneous liquidity and they strictly dominate the current set of private crowd funding vehicles.

austenallred 12y ago

He's assuming everything will go to zero. So while his post is about liquidity, he throws in "oh by the way all of tech will obviously come crashing down." Except for the tech companies he invested in, of course.