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Agree with everything except the financial market bit. Our IPO market is broken (make me the head of the sec lol) but it’s not insiders cashing out. It’s just trader versus trader and supposedly some win and some lose.
Historically firms only IPO a small float for a very good reason that public markets are different in how they analyze things than private markets. They look for countries hitting metrics and often have portfolios with many stocks versus focused funds. So they don’t know the companies that well at first. It trades for a while and then has some earnings reports and then insiders/private investors slowly add shares. For things with billions in market cap the public markets are just not able to absorb the entire float at one ipo. So they float 10% of the company typical though sometimes less. And all the insiders and private investors are usually banned from selling any shares for 6 months.
Now we have all these algo traders plus especially since COVID dumb retail money that have zero fundamental analysis. If the algo guys detect retail punting they bid it up crazy. And then you have that dude Huang who did the retail game at scale. And short selling is basically impossible in these names. Some thing blows up as a meme and it’s up 500% (happens all the time now) will blow up the shorts. They also changed a bunch of short borrowing stuff to prevent shorting without a borrower but then your borrow rate can blow out crazy.
Those first 6 months of trading are basically fake prices. Insiders aren’t allowed to sell. Shorts are too dangerous. And IPO stocks don’t just enter etfs (potentially some IPO etf but those often wait 6 months plus). Things like Tesla were public for I think a decade before they entered majorly etfs like spy.
It’s basically just a little Vegas part of markets without a ton of real investment. I find it embarrassing when stocks like VFS has a $150 billion market cap but I believe they only floated 1% of their shares so even the mark to market peak only had a $1.5 billion worth of shares on the public market. I wish they would find a way to fix this issue because I find it embarrassing when people like you say what Wall St idiots valuing this shithole at this price. Everyone does in fact know it’s crap but it’s not like you can short it and make money.
That's why shorting bitcoin so much better than shorting stocks. No manipulation with the floats, less $ from hedge fund manipulation. Stocks can easily be manipulated by management , whereas this is not possible or harder to do with bitcoin. Crypto is one of the most overhyped things ever, yet nothing but downhill since 2021 despite endless hype still. It would seem there does come a point where no amount of hype can help an asset class. Commodities overall , which crypto is more commodity-like than stock-like, tend to be better short candidates compared to stocks due to absence of earnings , buybacks, etc.
My experience is different - broad community consensus is that there are whales and brokers that go hunting for liquidity, massacring shorts and longs. The technical term is 'scamwick'.
Interesting. I'm not really a crypto guy (read Satoshi's whitepaper when BTC were going for pennies), or a trader, but I know a little bit about technical analysis. The "wick" here is the wick of a candle chart, which shows the open & close, high & low, for a given trading period. The delta between open and close forms the body of the candle, while the high and low (which necessarily equal or exceed the open and close) form the "wicks" (upper and lower) of the candle. A so-called scamwick is a recognition of suspicious price movements which indicate price manipulation.
My prior on "price manipulation" is that most manipulators lose in the long run, at least for deep markets, but that the attempt to manipulate prices is an important part of price discovery and akin to "random noise" which motivates the true price.
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management can try to prop up stocks with bogus PR. this is not possible with bitcoin. no amount of hype by Blackrock, Ark and others is enough to make bitcoin price go up. Even with whales , my experience is shorting is not a problem. gains do not hold , and when it does go up /down it's in a predictable manner...like pulling money out of a broken ATM.
In 21, Elon's tweets were a primary driver of price action. I lost a fair bit of money based on his announcements.
I would advise caution in shorting bitcoin just before the halving too.
yeah this stuck me as unethical and reckless on his part especially given tesla quietly sold its bitcoin position in 2022 as retail investors who heeded his advice bought at or near the top and held on the way down, both btc and doge
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When Beyond's lockup expired in October 2020, they were still trading at $100/share. ($11 now and still overpriced). Insiders absolutely cashed.
Nothing like Alex Karp levels, but yes, this was a transfer of wealth from your pension fund to company insiders. Dumb money retail sets the price, and then indexers come and buy in volume. So while you and I might realize that Beyond at $100 was fake, your pension fund was more than happy to buy in size.
Did it enter an index? Maybe the Russell. They all have some rules to prevent the worst stuff.
Yes, it's in the Russell 1000, Russell 3000, and Nasdaq Composite. (Because it's a tech stock, lol).
If you own VTI, you own it. Its not in the SPY index which has a profitability filter. But this doesn't mean that SPY is shenanigans proof. People front run stocks before they enter the SPY.
Am I butt-hurt that people who aren't me are becoming centimillionaires on the back of this stuff? Yes, I am. This is the real wealth inequality, not some doctor making $400k or whatever.
Beyond has multiple insiders who made $10 million plus on insider sales in the last 3 years alone. I don't have the totals from 2019, but they would be way worse, quite possible 9 figure exits. https://www.marketbeat.com/stocks/NASDAQ/BYND/insider-trades/
Lockup periods need to be 5 years at least.
Ya. Tesla was the big shenanigan in SP500.
Though at the higher price in BYND a reasonable time after lock up settling it was $8-10 billion. I don’t see that as obviously stupid. As there have been plenty of things I’ve called obviously stupid like crypto being more than a nerds play thing.
Conceivably BYND could have gotten a little flywheel going and continued to innovate into healthier better options. Maybe eventually add lab meats and become a behemoth. As the first to market they could have become the platform for all alt meats.
Water in a bottle companies have been sold in that range of 6-10 billion so atleast they innovated.
There have been far worse offenders than bynd. And I do feel like the SEC should figure out how to end some of the worst offenders. Chamath one of the worst. Whatever that Vietnamese electric car company that went to 130 billion last week was. Just makes are markets look comical. Maybe give companies rights to randomly sell stock if it’s behaving stupid to keep the punters out. It just seems like we could have a more orderly market.
I’d still think that for the most part pensions funds etc didn’t lose on these things (large amount).
I sort of get what you're gesturing at. A flywheel represents the difficulty of spinning up a new market. You need to solve both supply and demand at the same time to get the engine running. Failure is catastrophic while success is a money machine. If there is an imbalance, the flywheel is bottlenecked and doesn't want to spin.
In this case, the flywheel represents the pseudo-meat market, I suppose. There have been meat substitutes and meat replacements before, but this is really a new kind of market and new kind of product. Maybe this particular market is cursed, but if the flywheel gets going, then maybe:
AKA the pivot
Think you got it. Not necessarily a pivot though. It’s more like Tesla.
Entering Market as basically custom handmade cars.
Develop experience building cars and improving battery tech. And marketing skill. Plus develop car programming.
Enter at more scale and cheaper price point. Repeat all the same process improvements.
Once again cut price point and increase operational scale.
For beyond it would have been make $300-400 million a year selling shitty vegetable meat. Invest that in better vegetable meat at more scale. Probably eventually add on some kind of lab grown meat. Use experience in day chicken to expand into all kinds of lab meats.
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Fair enough. By and large I think we agree. Beyond was a bad investment, insiders got rich, and pension funds lost (debatable how much). But it wasn't a scam like Nikola or some of the other worst offenders.
Were pension funds substantially invested in Beyond? The Canadian teachers probably did, but they’re notorious gamblers (admittedly it’s paid off for them they’ve have something like 9% annualized real returns for 40 years), but most won’t have. I don’t care to find their cap table, and they’re not hugely helpful for pension funds ownership anyway for various reasons, but I’d be surprised if pension funds were well represented among the top institutional shareholders.
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