I somehow missed the headbar, it wasn't until I got to these comments that I realized the author was Mark Cuban.
I thought he was spot-on even before I knew who he was.
I think one of the big problems is the Sarbanes-Oxley Act implemented after the fall of Enron due to accounting problems. We wanted to make sure that there were no IPO's defrauding the public, but the regulations went too far and made sure there were no (or very few) IPO's, period.
And the IPO's that do happen are much much bigger. This is bad because much of the wealth that's created by a new company is created during its growth phase. In the 1900's, you could have simply bought shares in the young Microsoft or the young Apple -- at least there was a chance for some of that wealth went to regular folks who invested in the stock market. In the 2000's, the young Google and the young Facebook were only accessible to the rich -- VC firms and accredited investors with the right connections.
This isn't just bad for regular investors, it's bad for companies too. A public market has a lot more counterparties and is more competitive -- so (in theory at least) a publicly traded company shouldn't have to give up as much equity to raise a fixed amount of cash (because rather than being limited to making offers to a few private investors, there's a continuous bidding war for the stock in which pretty much anyone can be a buyer).
I thought he was spot-on even before I knew who he was.
I think one of the big problems is the Sarbanes-Oxley Act implemented after the fall of Enron due to accounting problems. We wanted to make sure that there were no IPO's defrauding the public, but the regulations went too far and made sure there were no (or very few) IPO's, period.
And the IPO's that do happen are much much bigger. This is bad because much of the wealth that's created by a new company is created during its growth phase. In the 1900's, you could have simply bought shares in the young Microsoft or the young Apple -- at least there was a chance for some of that wealth went to regular folks who invested in the stock market. In the 2000's, the young Google and the young Facebook were only accessible to the rich -- VC firms and accredited investors with the right connections.
This isn't just bad for regular investors, it's bad for companies too. A public market has a lot more counterparties and is more competitive -- so (in theory at least) a publicly traded company shouldn't have to give up as much equity to raise a fixed amount of cash (because rather than being limited to making offers to a few private investors, there's a continuous bidding war for the stock in which pretty much anyone can be a buyer).