The Indelible Bonobo Experience

Renaissance Monkey: in-depth expertise in Jack-of-all-trading. I mostly comment on news of interest to me and occasionally engage in debates or troll passive-aggressively. Ask or Submit 2 mah authoritah! ;) !

Quote Post
American stocks have doubled in price since the market hit bottom three years ago. But trading in the United States stock market has not only failed to recover since the 2008 financial crash, it has continued to fall. In April, average daily trades stood at 6.5 billion, about half their peak four years ago. By comparison, after the market busts of 1987 and 2001, trading recovered within two years. In fact, going back to 1960, trading had never declined for three consecutive years, let alone four and counting.
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nyt

  • American stocks have doubled in price since the market hit bottom three years ago. But trading in the United States stock market has not only failed to recover since the 2008 financial crash, it has continued to fall. In April, average daily trades stood at 6.5 billion, about half their peak four years ago. By comparison, after the market busts of 1987 and 2001, trading recovered within two years. In fact, going back to 1960, trading had never declined for three consecutive years, let alone four and counting.
  • Investors haven’t just hunkered down, they have headed for the exits. Since the start of 2008, domestic stock mutual funds, a common way for individuals to invest, were drained of more than $400 billion, compared with an inflow of $52 billion in the four years before that.
  • There is also the feeling that the market has become increasingly unfair to investors. For example, Mr. Popper also reported recently on rebates to brokers from stock exchanges. In general, brokers are required to find the best prices for clients who pay them to buy and sell shares. But with the nation’s 13 exchanges now paying brokers for sending them business, brokers may have an incentive to search for the biggest rebate rather than the best price. A new study has estimated that rebates could be costing mutual funds, pension funds and individual investors as much as $5 billion a year.
Posted in investment investing stocks decline public companies corruption capitalism capital maker-taker broker rebates kickbacks securities and exchange commission sec
Photo Post
The average life expectancy of public companies shrank from 65 years in the 1920s to less than ten in the 1990s. So has the life expectancy of CEOs. The average job tenure of the CEO fell from 8.1 years in 2000 to 6.3 years in 2009, according to Booz & Co, a consultancy. (via Economist) The worry is that regulators and owners both seem to be making it harder for bosses to look beyond quarterly earnings. France’s “SCAs” or Sociétés en Commandite par Actions have two tiers of partners: general ones jointly and severally liable for a company’s debts, and limited partners who are ordinary shareholders with little power and who can lose only what they invest. This might provide a model for investment banks. Kauffman Foundation has shown that one reason America has been better at generating jobs than Europe is its skill at creating innovative companies such as Amazon, eBay and Google. These companies took off when they went public. William Draper, one of Silicon Valley’s most successful investors, speaks for many when he argues that this ecosystem may be drying up. Venture capitalists are recouping their investment by selling new companies to established ones rather than preparing them for independent life. In 2010 five large companies gobbled up 134 start-ups—more than the entire crop of American IPOs that year. Two of the most talked-about start-ups of recent years—Skype and Zappos—chose to sell themselves to giant firms (Microsoft and Amazon respectively). This may not be good for the start-ups. Imagine if Microsoft or Apple had sold themselves to IBM in the 1980s and you get a sense of the problem. I would’ve liked to see a parallel drawn between the rise of intellectual property divisiveness and erosion of the public domain and the decline of the public companies.

The average life expectancy of public companies shrank from 65 years in the 1920s to less than ten in the 1990s. So has the life expectancy of CEOs. The average job tenure of the CEO fell from 8.1 years in 2000 to 6.3 years in 2009, according to Booz & Co, a consultancy. (via Economist)

  • The worry is that regulators and owners both seem to be making it harder for bosses to look beyond quarterly earnings.
  • France’s “SCAs” or Sociétés en Commandite par Actions have two tiers of partners: general ones jointly and severally liable for a company’s debts, and limited partners who are ordinary shareholders with little power and who can lose only what they invest. This might provide a model for investment banks.
  • Kauffman Foundation has shown that one reason America has been better at generating jobs than Europe is its skill at creating innovative companies such as Amazon, eBay and Google. These companies took off when they went public.
  • William Draper, one of Silicon Valley’s most successful investors, speaks for many when he argues that this ecosystem may be drying up. Venture capitalists are recouping their investment by selling new companies to established ones rather than preparing them for independent life. In 2010 five large companies gobbled up 134 start-ups—more than the entire crop of American IPOs that year. Two of the most talked-about start-ups of recent years—Skype and Zappos—chose to sell themselves to giant firms (Microsoft and Amazon respectively). This may not be good for the start-ups. Imagine if Microsoft or Apple had sold themselves to IBM in the 1980s and you get a sense of the problem.
I would’ve liked to see a parallel drawn between the rise of intellectual property divisiveness and erosion of the public domain and the decline of the public companies.
Posted in public domain public companies decline private equity business investment investing finance economy