IPOs used to be necessary for growth but that hasn't been the case for many years. Private markets are now so large that the only purpose of an IPO is exit liquidity for employees and early investors. This change has been a major driver of inequality in the states and there are a number of proposals to make it easier for the public to participate.
It's pretty sad that Google, Microsoft, Nvidia, Sequoia etc. are the ones who capture all of this growth and not the public, as would have been the case in the previous generation.
One might ask why the public markets would even offer this liquidity. One important answer is that they are forced to via index inclusion.
So if you know an index buyer who takes satisfaction in staying above fooled-by-randomness active traders, remind them that that they are now the designated unload zone for shares the privates don't want anymore.
I mean Anthropic doesn't have to 5000x to be a decent inclusion in an index fund. It can just go up 10% a year and the index purchasers will be happy.
And yet, active traders still can't beat indexes.
...such as Renaissance Technologies which has only been beating indexes by double digits for 4 decades. Probably just a fluke.
I took the comment to mean "most" active traders, not all. Obviously it's possible to beat the market, it's just very difficult, and many fail trying, especially if it's not their day job.
Agreed, but the issue is that their approach does not scale with more $. There is a reason they do not allow outside investment and it's limited to only employees and early adopters. As a non-profesional (everyone here), it's borderline impossible to find the next Renaissance medallion fund. If it were that obvious who it was, every guy would pile in until their approach no longer works
> As a non-profesional (everyone here)
I wouldn’t be so sure of that
"Buy vanguard etf" is a Google search away. Can you show me where I can invest my money in Renaissance Technologies' funds?
Is RenTech more than a rounding error amongst all active traders?
Is it more than a rounding error amongst ALL (active/passive) traders?
You can thank the JOBS Act of 2012 for that
Is it the EGC lack of disclosure rules (for pre-Unicorns), the fractional share ownership? How is the JOBS Act what drove change?
How so? Could you elaborate on the dynamic that you are identifying?
The laws changed for IPOs. It used to be when the total investors got over 500, including employees holding shares, that would trigger a company to need to go public. It was changed some time ago (not sure if JOBS act or what) to be much higher, like 2000 investors and excludes employees.
This means companies stay private and keep getting private capital/investments (the flip side being private equity in the pre-IPO company) and typically an IPO is really existing shareholders realizing their investment.
So Amazon, Microsoft were forced to go public much earlier, then had their growth. Anthropic has already had growth, Claude AI is well known at this point, and after IPO there may not be as much growth after. In fact, the stock might go down because they have to report their full financials.
Thanks, I wasn't aware of that.
It does seem as if this IPO is the "reward for effort of the last few years" as opposed to "building the runway for the next few years of growth". The latter I can understand as a high risk, high reward investment, whilst the former feels as if it should be a blue-chip sort of investment, but there are too many unanswered questions, or at least too many unique arrangements in the structure for it to be any kind of slow-but-trusted-into-the-future stock purchase.
> It's pretty sad that Google, Microsoft, Nvidia, Sequoia etc. are the ones who capture all of this growth and not the public
the public could buy google, m$, nvidia and so on and benefit from that growth, no?
Anthropic would not have scaled this quickly if it was publicly held. Perhaps, that would've been a good thing.
> It's pretty sad that Google, Microsoft, Nvidia, Sequoia etc.....
Three of those four are public companies, so the public can absolutely participate.