Was this supposed to be an answer rather than a comment?
It’s helpful to spell these things out, but it doesn’t bring me closer to an answer, these are the things that I’m thinking might not be very efficient, most of the money seems to spill into the laps of speculators who are just not using it nearly as well as the company would?.. (If they are efficient investment mechanisms, I will need to see a more detailed argument before I’ll understand)
One thing to notice here is that most companies can only benefit from the appreciation of their stock by creating more of it, effectively debasing it a bit. This seems bizarre. They dilute the investors’ shares and the investors have to just say “yes good this was part of the plan” because if it hadn’t been, there would have never been any publicly traded shares for them to buy because there wouldn’t have been a point in the company offering them. Well, maybe there should be no publicly traded shares to buy! (I don’t know. I haven’t started to identify any better mechanism yet)
(imagining)
What if investors had to pay a portion of their income back to their holdings.
I guess you could implement that as… the stock continuously gradually returns to the company.
Oh, that’s equivalent to continuously creating new stock at a pre-agreed rate! o-o
Diluting the shares is only a bad thing if the companies overall value (called “market capitalization”) is constant (or grows slower than the dilution). If, for example, a company has 9k shares outstanding, sells another 1k shares (10% dilution), uses the money to expand the business, increasing profits, and as a result the value of the company doubles (meaning share prices almost double), the owners of those first 9k shares should be quite happy about that.
I’m unsure what problem you are trying to solve with your proposal for investors to pay money to the companies they own shares of. What it actually sounds like to me is a buy back. Sometimes companies buy shares of their own stock from the market, decreasing the number of outstanding shares (the reverse of dilution). For the shareholders who sell the stock back to the company, they are being directly paid for their investment. For the shareholders who do not, the supply of stock in that company has decreased, which results in an increase in the value of the remaining shares.
I think you also need to realize that having stocks like this isn’t just about raising capitol, it is also about creating a check on the CEO and other managers. The shareholders elect the board of directors, which has the power to hire and fire the CEO, among other things. Without stock, who would the CEO have to answer to? Powerful unaccountable people are not a thing I want running around in society.
I’m unsure what problem you are trying to solve with your proposal for investors to pay money to the companies they own shares of
It was “Could we get that money to do something better, then?”
It is possible for speculation to be rewarded more than is useful, I suspect that it’s quite common.
Powerful unaccountable people are not a thing I want running around in society.
A part of me laughs at the idea of holding tech accountable and prepares for the ending where it is not, could not be.
I engaged in some corporate governance yesterday and… I don’t think this one at least was designed to make the company accountable to shareholders, parts of it seemed chosen to preclude that. I think they give an impression of accountability, which must be reassuring to some people. One big advantage I sense is to the company; the governance process solicits motivated feedback from many parties. They will ultimately use the feedback however it benefits them.
Update: It’s been proposed (at least, within IOHK) that a variant of NFTs be created that does this (proportion of profits from resale go back to the artist, or a charity designated by the artist). I think this makes a bit of sense for this scenario. Owners of a NFT want a sense that they fully own the thing, so “printing additional stock” (or selling NFTs as pools of stock that multiple people can buy) wouldn’t work.
Feels like a very pre-quantitative mindset though.
On reflection, I think I have heard of “fractionalized NFTs” so uh, this gets quite blurry.
Was this supposed to be an answer rather than a comment?
It’s helpful to spell these things out, but it doesn’t bring me closer to an answer, these are the things that I’m thinking might not be very efficient, most of the money seems to spill into the laps of speculators who are just not using it nearly as well as the company would?.. (If they are efficient investment mechanisms, I will need to see a more detailed argument before I’ll understand)
One thing to notice here is that most companies can only benefit from the appreciation of their stock by creating more of it, effectively debasing it a bit. This seems bizarre. They dilute the investors’ shares and the investors have to just say “yes good this was part of the plan” because if it hadn’t been, there would have never been any publicly traded shares for them to buy because there wouldn’t have been a point in the company offering them. Well, maybe there should be no publicly traded shares to buy! (I don’t know. I haven’t started to identify any better mechanism yet)
(imagining)
What if investors had to pay a portion of their income back to their holdings.
I guess you could implement that as… the stock continuously gradually returns to the company.
Oh, that’s equivalent to continuously creating new stock at a pre-agreed rate! o-o
Diluting the shares is only a bad thing if the companies overall value (called “market capitalization”) is constant (or grows slower than the dilution). If, for example, a company has 9k shares outstanding, sells another 1k shares (10% dilution), uses the money to expand the business, increasing profits, and as a result the value of the company doubles (meaning share prices almost double), the owners of those first 9k shares should be quite happy about that.
I’m unsure what problem you are trying to solve with your proposal for investors to pay money to the companies they own shares of. What it actually sounds like to me is a buy back. Sometimes companies buy shares of their own stock from the market, decreasing the number of outstanding shares (the reverse of dilution). For the shareholders who sell the stock back to the company, they are being directly paid for their investment. For the shareholders who do not, the supply of stock in that company has decreased, which results in an increase in the value of the remaining shares.
I think you also need to realize that having stocks like this isn’t just about raising capitol, it is also about creating a check on the CEO and other managers. The shareholders elect the board of directors, which has the power to hire and fire the CEO, among other things. Without stock, who would the CEO have to answer to? Powerful unaccountable people are not a thing I want running around in society.
It was “Could we get that money to do something better, then?”
It is possible for speculation to be rewarded more than is useful, I suspect that it’s quite common.
A part of me laughs at the idea of holding tech accountable and prepares for the ending where it is not, could not be.
I engaged in some corporate governance yesterday and… I don’t think this one at least was designed to make the company accountable to shareholders, parts of it seemed chosen to preclude that. I think they give an impression of accountability, which must be reassuring to some people. One big advantage I sense is to the company; the governance process solicits motivated feedback from many parties. They will ultimately use the feedback however it benefits them.
Update: It’s been proposed (at least, within IOHK) that a variant of NFTs be created that does this (proportion of profits from resale go back to the artist, or a charity designated by the artist). I think this makes a bit of sense for this scenario. Owners of a NFT want a sense that they fully own the thing, so “printing additional stock” (or selling NFTs as pools of stock that multiple people can buy) wouldn’t work.
Feels like a very pre-quantitative mindset though.
On reflection, I think I have heard of “fractionalized NFTs” so uh, this gets quite blurry.