Efficiency What if the stock market was solved? Like what if someone made a robot that could just tell you the right price for any public stock at any time? Presumably a lot of people would invest their money with the robot, and the robot would buy and sell stocks until they reached the right price, and then the prices would be right. People would be able to invest in the stock market and get a stable return on their investment corresponding to the long-term growth of the economy; companies with good projects would be able to finance those projects while companies with bad projects wouldn't. No one would get super rich by buying stocks at the wrong price, because the robot would make sure all the stocks had the right price. It would be good, but in a boring way. It would efficiently support economic growth and saving, but it wouldn't be very exciting. A certain sense of adventure and artistry would go out of the market. Out of the public stock market, I mean. Presumably the robot would not solve all financial markets, at least not immediately, and the adventurers and artists would migrate to private markets or collateralized loan obligations or wherever they didn't have to compete with the robot. But there would be a lag, and the generation of humans who grew up in imperfect unsolved stock markets—and who became rich and successful by buying stocks at the wrong prices—would keep trying to make a go of it, and be frustrated, and get mad at the robot for making all the prices right. There would be sympathetic profiles of those humans in the press, nostalgic appreciations for their devalued skills and vanishing way of life. "They got so rich by buying stocks at the wrong prices," people would think; "it is unfair that they cannot continue getting richer by doing that." Anyway here's "Twilight of the Stock Pickers: Hedge Fund Kings Face a Reckoning": Stock hedge funds outgunned the S&P 500's total return, meaning with dividends included, by an average of more than 5 percentage points a year from 1990 through 2009, according to an analysis of HFR data that tracks equity funds using both fundamental and quantitative strategies. From 2010, early in a record bull run, through this September, clients have been paying those funds to trail the S&P by nearly 9 points a year, on average. … Managers say the rise of quantitative and passive investing has distorted how stocks move and reduced the chances to profit. Quants can spot and eliminate certain mispricings of securities that once offered opportunities to stock pickers. Further complicating matters, stocks in recent years have had an increasing tendency to move in tandem, whether on signs of a Federal Reserve rate move, a presidential tweet on trade or other events. Look, you're not supposed to be able to pick which stocks will go up! This is great news! Markets are more efficient! You don't need to pay a person a billion dollars to make stock prices efficient; now a robot will do it for pennies! Everything is great! Obviously I exaggerate and we are talking about a relatively short bull-market period and there is no guarantee that the robots will do a good job through the cycle, etc., but my point here is only that if stock markets had been totally and permanently solved this is the sort of thing you'd read. You'd read about how sad the stock-pickers are, and how mad they are at the robots who "distorted" prices (by making them correct), and how unfair it is that the robots got rid of the mispricings that used to make the stock-pickers rich. The other thing you'd expect to see is that the stock-pickers are retreating from the robots into more unsolved markets. And so in fact: One answer is to buy stakes in businesses that haven't yet gone public. Fat returns flowed in recent years to Tiger Global Management and Coatue Management—firms that invested early in then-private companies such as Facebook Inc. and JD.com, in addition to public companies. D1 Capital Partners, a high-profile fund that started last year using this hybrid approach, recently gauged interest in a vehicle that would invest only in private companies, said people familiar with the fund. And Bloomberg reported last week that "almost half of BlackRock Inc.'s institutional clients plan to increase their allocation to private asset classes": "With public markets becoming so efficient it has become difficult to produce returns in excess of market gains, so institutional investors are looking to private markets to generate alpha." (Though I guess BlackRock would say that.) There are a lot of these articles these days, about how it is harder for stock-pickers to beat the market than it used to be, and these articles always sound to me like unambiguous good news, but they usually have a worried and elegiac tone. This one begins with reminiscences about the time Jonathon Jacobson's Highfields Capital Management "made a mint in 2001 betting against Enron Corp." Enron! Enron was bad! If the public stock market no longer enriches hedge fund managers by producing Enrons for them to bet against, that's progress! SoftBank We have talked a lot in the past few months about the relationship between WeWork and SoftBank, but always in kind of an imprecise way. There's this thing called SoftBank, and it has a lot of money, and it is run by idiosyncratic visionary genius Masayoshi Son, and Son really gets along with idiosyncratic visionary WeWork founder Adam Neumann and so pumped a lot of SoftBank's money into WeWork, first enthusiastically and at increasing valuations (as high as $47 billion) and then gloomily and at a much lower valuation (as low as about $5 billion).[1] But actually there are two related things called SoftBank, and each of them has a lot of money, and they both invested in WeWork, but differently. SoftBank Group Corp. ("SoftBank" from here on) is a public company run by Son that basically serves as a holding company for a bunch of different technology-ish investments; the SoftBank Vision Fund ("Vision Fund" from here on) is a private capital pool managed by SoftBank that started out in 2017 with $100 billion of capital, much of it from SoftBank itself but plenty from Saudia Arabia's and Abu Dhabi's sovereign wealth funds. They have overlapping missions; both own big stakes in tech companies, basically. SoftBank is older than the Vision Fund, and in the early days of the Vision Fund SoftBank sold some of its private-company stakes to the Vision Fund, essentially negotiating on both sides of the deal. The conflicts of interest are obvious. But they are also subtle in one particular way. Often when people say "conflict of interest" they mean something like this: I manage a company, it is in the company's interest to do X, it is in my personal interest to do Y, so I do Y. My fiduciary interests conflict with my personal interests. Here, though, there are two conflicting fiduciary interests: Masayoshi Son, the decisionmaker for both the Vision Fund and SoftBank, has two different constituencies (public shareholders at SoftBank, Saudi princes at the Vision Fund) to please, and it is not obvious in any particular case where his long-term personal best interests lie. Probably keeping everyone reasonably happy is better for him than just favoring one side or the other, but the conflict is not as simple as "what is good for Son may not be good for his investors." It's that Son has two sets of investors to please. Anyway WeWork. Basically the story is that the Vision Fund poured a ton of money into WeWork on the way up, and then SoftBank poured in a ton more money on the way down.[2] There is absolutely no way that that will not be awkward! It's awkward already: Benjamin Segal, a portfolio manager at Neuberger Berman, said he is concerned that SoftBank's efforts to support the Vision Fund and protect the interests of some of its big investors could come at the expense of SoftBank shareholders. "There could be some shift in value away from SoftBank shareholders to more powerful constituencies," said Mr. Segal, who sold his SoftBank shares in 2017. "Poor governance magnifies poor investment decisions." ... But if SoftBank bails out other portfolio companies or increases its support for WeWork, ratings companies might have to reconsider how they view the conglomerate, said Hiroyuki Nishikawa, an analyst at S&P. "We didn't expect such support [for Vision Fund companies], especially not from SoftBank itself," Mr. Nishikawa said. SoftBank had told investors and credit-rating companies that it planned to make big investments principally from the Vision Fund, not its own balance sheet. It said that except for the capital that the group had contributed, it wouldn't be on the hook for any losses in the fund. But think how much more awkward it will be when WeWork either works out or doesn't. If it doesn't—if SoftBank ends up losing money even on its new, much lower-priced investment—then all of those worries about "some shift in value away from SoftBank shareholders to more powerful constituencies" will have come true. SoftBank will have thrown its good money after the Vision Fund's bad money, wasting shareholder cash to preserve value for Saudi investors. The awkwardness will I guess be mitigated a bit by the fact that the Saudis will lose money too. But what if it does work out? What if WeWork ends up being worth $100 billion, as Masayoshi Son once predicted? Then SoftBank the company will disproportionately benefit: It is putting up $3 billion to buy almost half of the company, while the Vision Fund previously put up more than $9 billion to buy less than a third. If everything works out, SoftBank will make much more money with much less risk than the Vision Fund did. And since Masayoshi Son made both of those investments, and negotiated both of their valuations, there will be questions: Did SoftBank sabotage WeWork's initial public offering, and lowball WeWork's valuation in the subsequent bailout, in order to seize value for itself away from the Vision Fund? Unless things work out and SoftBank transfers its shares to the Vision Fund at cost, which is a thing it has done in the past! In which case SoftBank will have taken all the risk for the Vision Fund to get all the benefit, etc. etc. etc., you get the idea here, there is nothing that can happen here that will not leave one side or the other aggrieved. Of course I said something similar about WeWork, which also had some obvious conflicts, though of the simpler kind (Neumann's personal interests versus those of his company). And it turned out that, yep, Neumann extracted a lot of money for himself as his company was imploding. I assume that's not a coincidence. Maybe Neumann and Son bonded over their shared love of conflicts of interest. The fact that Son is comfortable with uncomfortable corporate structures may be what made him so comfortable with WeWork. Aramco The basic problem for the Saudi Arabian Oil Co. is: - Saudi Crown Prince Mohammed bin Salman, who effectively controls the state-owned company, would like it to do an initial public offering as soon as possible.
- He would like the IPO to value Aramco at $2 trillion.
- Investors seem to think it is worth about $1.2 trillion.
- $1.2 trillion is less than $2 triillion.
While the numbers are comically large here, the problem is actually fairly common. Lots of owners of private companies have unrealistically high expectations of the valuation they can fetch in public markets. There is usually a solution, in two parts: - The company's bankers gently tell it to lower its expectations, and
- Potential investors bluntly tell it to lower its expectations.
But those transmission mechanisms are a little broken here. While "some foreign investors that Saudi Aramco has sought out believe it is worth no more than $1.2tn," Saudi "domestic investors could probably provide enough support to achieve that $2tn valuation." Those domestic investors will probably pay the $2 trillion out of some combination of enthusiasm and, uh, "enthusiasm": Local bankers have pointed to enthusiasm among Saudi investors. The kingdom's banks are expected to lend heavily to local investors for their share purchases. Meanwhile, wealthy merchant families — some of whom were ensnared in a corruption crackdown two years ago — are being pressured to invest. Look if WeWork could have ordered banks to lend money to investors to fund share purchases, and if it could have threatened people with arrest and torture if they didn't buy shares, then I am pretty sure its IPO would have gone well. Aramco more or less can, which means that (1) there is a chunk of pretty inelastic demand at $2 trillion and (2) even if you are a foreign investor who thinks that the $2 trillion number is laughably high, you will be very diplomatic about expressing that in meetings with Aramco officials. Meanwhile the bankers are also responsible for walking back the price, and they too are perhaps erring on the side of diplomacy: People close to Saudi Aramco lay a big part of the blame for the company's current predicament with the advisers and bankers working on the IPO who have failed to adequately challenge Prince Mohammed's unrealistic assumptions. … To get a role on the listing many of them made optimistic assumptions so they could reinforce the case for a $2tn valuation, according to people familiar with deliberations. "We were pitching to get the work, what do you expect?" said one banker on the deal. Right no as I have often said before, there was only one possible right answer for the banks pitching this IPO, and that was to make "optimistic assumptions so they could reinforce the case for a $2tn valuation." Still your job after winning the mandate is very much to walk the company down to a realistic level that can win investor support. Again, though, when your client has a history of extrajudicial killing you might prefer not to be the one to tell him that his pricing—the pricing that you pitched!—is unrealistic. Sneaker spoofing Ah: "Trading sneakers is not so different from trading stocks," said Wang Zhichen, a 32-year-old client manager at a Shanghai mobile-payments firm, who checks prices on Nice and Poizon, two widely used Chinese sneaker-trading platforms, as soon as he wakes up. He then adjusts the prices of shoes he intends to sell to a clientele of 700-plus potential buyers via Chinese all-purpose app WeChat. "You need to watch the opening and closing prices." Yes: Sneaker trading platforms were set up partly to help buyers verify shoes' condition and weed out fakes, much like similar platforms in the U.S. In China, however, speculators exploited a 30-minute time lag in which both buyers and sellers can opt out of a trade without penalty, using multiple accounts to cancel trades and make new bids in a rapid-fire sequence that creates an illusion of hot demand, sometimes tripling the price of a shoe in half an hour. Some use a "warehouse" option to buy and sell shoes without ever taking delivery of the actual item. Others trade on fractions of shoes, represented by a token, through cryptocurrency exchanges such as 55.com. I have in the recent past raised questions about whether there is actually investor demand to trade fractional shares of office buildings, or municipal bonds, so I suppose I am obligated to admit that there is demand to trade fractional shares of sneakers. Sneakers are smaller and cheaper than buildings, and also there is an obvious use value—you can wear them—that is lost with fractional ownership, though yes yes yes I understand that these are not the sort of sneakers that you wear. These are the sort that you trade. Oops Back in 2015, PTG Capital Partners made a takeover offer to buy Avon Products Inc. TPG Capital Partners is of course a leading multibillion-dollar private equity firm with more than $111 billion under management, but TPG Capital Partners did not make a bid for Avon. PTG Capital Partners did. PTG Capital Partners isn't anything. The offer was a hoax. Avon's stock briefly went up, and then went right back down again. Eventually the SEC found the guy who did the hoax. It turns out he didn't even make any money on it? I don't know. Anyway the point of the story was that if you see a takeover announcement that misspells the name of one of the companies involved, maybe don't rush out to trade on it. On the other hand: Tiffany Confirms Receipt of Unsolicited, Non-Binding Proposal from LMVH Tiffany Shareholders Advised to Take No Action Pending Board Review Tiffany & Co. (NYSE:TIF) today confirmed it has received an unsolicited, non-binding proposal from LMVH Moet Hennessy – Louis Vuitton to acquire Tiffany for $120 per share in cash. LVMH Moet Hennessy Louis Vuitton SE is of course a leading luxury-goods company with a market capitalization of almost 200 billion euros. LMVH, on the other hand, is a … typo. The offer appears to be real, and the typo is Tiffany's, not LVMH's, which I guess is more understandable. Still it is not the normal procedure in takeover situations. Lotta lawyers in takeover situations. Usually they spot the typos. (The press release is now corrected online.) Anyway, notwithstanding the typo, and the fact that Tiffany advised its shareholders not to do anything, the stock opened up almost 30% today at $127.65, above LVMH's, or whoever's, offer price. Things happen HSBC Embarks on Massive Overhaul After Profit Misses Estimates. AT&T Reaches Truce With Activist as TV Defections Worsen. The $4 Trillion ETF Industry Is Creating More 'Roadkill.' JPMorgan Arms Coders With Trading Licenses as Quants Advance. London School of Economics academics outraged by proposed China programme. Bitcoin time traveler has changed his mind. Indian daredevils form 'bed of nails sandwich' for Guinness record. Migrating Russian eagles run up huge data roaming charges. If you'd like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. Or you can subscribe to Money Stuff and other great Bloomberg newsletters here. Thanks! [1] SoftBank's recent bailout of WeWork involved a direct investment "at $11.60 per share," or about $5 billion, and a tender offer "to all non-SoftBank shareholders at a price of $19.19 per share," or about $8 billion. It's not clear which number is more "important" or "correct," and the latter number got most of the headlines. [2] According to the IPO S-1, the entire WeWork stake seems to have been held through Vision Fund entities. The bailout—particularly the $5 billion loan and $3 billion tender offer—seems to have been through SoftBank itself. | 
◂‹〖DownLoad〗 2020 Falling Full Movie Online released 2020. story: John Peterson lives with his partner Eric and their adopted daughter in ...
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