The Stock Market Thread

I've been saying it since 12ish when instead of fixing fundamental issues we just went too big to fail and more cronyism.

 

Which is only going to kill and hurt smaller players, creating more cronyism and less competition in the market.

 

depends if it's unexpected or not.

 

Ok, so nine years. When does it turn to the doom and gloom you're predicting it will?

Or, if you aren't predicting doom and gloom, what are you predicting the impact will be... and then also when?

 

I don't think it has to be doom and gloom. There will be some short term pain for sure, but might put us on a more sustainable path for everyone.

I hope it puts us back on more market principals instead of cronyism and corporatism

 

Right. More generalities, less specifics. Understood.

Well, you're right. The thing that does a thing might result in a thing. One day.

 

Good luck with getting rid of cronyism.

 

Will never go away but doesn't mean we can't reduce it.

 

How? Let's suppose you start a successful business, and go to appoint the board. Do you want board members that will vote for you, or against you?

Cronyism is baked into capitalism. It can't be reduced. As a capitalistic system becomes more optimized, it is highest. For this very reason that you don't appoint board members that are best suited to guide a company, you appoint board members that are best suited to grow your personal revenue. Which is... capitalism!

 

Well that’s why the shareholders vote for the board of directors but not the ceo, but yeah it goes that way many times anyway.

 

"Well" that's why when corporations are formed, the shares are established at formation, and the founders then dictate who gets what percentage, and when. And then they carry those shares over when it goes public.

But, yea, you knew that, you're just, once again, for some reason, trying to muddy clear water.

Shareholders don't come first at formation. That's why it goes that way.

 

founders don’t get to dictate the percentages if they want capital and they certainly can’t just decide to keep their percentage if they are going public because you have to dilute the shares by definition. That’s what going public means, selling your shares to the public. It’s actually pretty rare for a public company to have a majority shareholder.

 

They absolutely dictate percentages. That's what raising capital is, defining ownership. If I invest capital in you for a percentage, I've defined what I believe your company is worth, based on the percentage I've taken and the amount I've invested. But more importantly, the founder is deciding whether that value is accurate before taking the funding. Which means they have the most say in percentages for capital, of anyone.

The shares are diluted proportionally. It isn't like the primary share holder suddenly is no longer the primary share holder because they went public. They hold the same proportion as they did prior. As do everyone else that had percentages, but now the shares are sold for capital, which allows the initial investors to recoup their initial investment, or hold on to it for a strong investment.

Being majority shareholder is less important than controlling majority shares. Nobody puts 51% of shares out in the wild, because that allows hostile takeover on IPO. Nobody is that dumb, despite you seemingly suggesting it to be so.

 

Well the second and third paragraphs couldn’t be more wrong. The shares have to come from somewhere. If the company is doing an ipo either shareholders are selling or shareholders are being diluted. That’s the way it works.

Zuckerburg owns 14% of Facebook
Musk 22% of Tesla
Bezos 10% of Amazon

 

we searched our database for the names of the founders, and the amount of equity they held at the IPO.

On average, all founders combined owned 15% of the company, which was worth $100 million

https://priceonomics.com/how-much-equity-do-founders-have-when-their/

 

Are you serious? The shares are diluted proportionally.

If I hold 60% of a company pre IPO, and that is worth $100,000,000, once it moved to 14%, it's still $100,000,000.

That's what proportional means.

The primary share holder is still the primary share holder, and the amount of money necessary to unseat that person is the $100,000,000 + the new cost of shares at IPO.

To continue the 14% of Zuckerberg, before he went public, he controlled the majority of shares of his private company, either through direct ownership, or through "cronyism" by ensuring people loyal to him had shares.

When those diluted, they diluted proportionally to ownership, and he still controlled that effective percentage, which would be greater than 51%, because the outstanding shares had no voting rights assigned to them.

If only 30 votes can be cast, out of a total of 100 votes, 16 votes is a majority.

Again, that's how proportions work.

Nobody is going to go IPO before having that proportion locked up. Nobody is that dumb, despite your continual attempts to show otherwise.

 

what? If you now own 14 percent of the company you don’t have control anymore. If I buy public stock I get to vote. If I buy 51 percent of the public stock I can shitcan the ceo. Super voting share classes are exceedingly rare for public companies. Basically google, Facebook, and Nike and a handful of tech companies.

you don’t really understand this at all do you?

 

I understand this very well. You seem to only have a theoretical knowledge.

If I own 14% of a company, and those that are loyal to me own 2% and 10%, we own 28% of shares. If now 72% of shares are out, but not bought (ak [uck fay]ing a: fl0at), that 28% is still a controlling majority, and that 14% is still a controlling majority, because that's the highest percentage of shares outstanding. Because that's how proportions work.

Now, when you get around to buying public shares, you can buy 51% and control the company. That's theory. In practice, that 51% is not purchasable for any existing amount of money, because it is astronomically high.

 

this is gibberish.

what do you mean 72 percent are out but not bought?

 

I can't seem to explain this, so I'll just chalk it up as a failure on my ability to communicate. I'll try just simply:

There is a reason CEOs aren't immediately driven out. There is a reason companies aren't immediately taken over. There is a reason it is DIFFICULT to oust CEOs. There is a reason boards are made up of the way they are. And there is a reason the public doesn't actually control anything, they merely have the illusion of control:

Most public holders (the 72%) don't vote.