If this is the first round of the game, the winners are ranked accordingly: capitalists enjoy the highest book premium, followed by equity investors, then entrepreneurs, and finally stock investors who bear the transaction risks. However, from the perspective of liquidity, equity investors exit at a premium and no longer bear the operational risks of the enterprise.
The exit of equity investment involves trade-offs. After painstakingly nurturing a company for years, choosing to exit at its most glorious stage means not taking away the company's profits and no longer sharing in its growth. This mindset can be interpreted through a rephrased famous poem: "Profits are indeed precious, but growth is even more valuable; if freedom is the goal, both can be forsaken." Here, "freedom" refers to the liquidity of capital, and the price paid for gaining "freedom" is neither past profits nor future growth, but rather what? It is the liquidity premium that the company gains after going public.
Equity investors' pursuit of "freedom" far exceeds their desire for profit. In the trade-off between profit maximization and liquidity premium, equity investors prefer liquidity, while capitalists prefer profit maximization. Therefore, the game of "Landlord Fight" does not always result in winner-takes-all. After the company goes public, capitalists enjoy the highest book asset premium, but due to the lack of freedom, their book asset premium fluctuates with the ups and downs of stock prices. Capitalists not only bear the operational risks of the enterprise but also the transaction risks of stocks. After equity investors exit, stock investors come and go like revolving lanterns, and entrepreneurs can choose to leave perfectly after realizing equity incentives, except for capitalists who do not have such freedom. In this round of "Landlord Fight," the loser becomes the capitalist because the company's pursuit of profit maximization is both an incentive and a shackle.
Saying No to Winner-Takes-All
Modern companies derive their liquidity premium from the capital market. This premium is related to the company's profits, but there is no linear relationship. The fact that the Growth Enterprise Market (GEM) soared on its opening day indicates that the premium a company gains after going public mainly comes from investors' irrational frenzy, as the growth premium represented by corporate profits has already been reflected in the issue price-to-earnings ratio. In reality, neither stock investors nor equity investors have the profit motive of capitalists and entrepreneurs. Although their returns are contingent upon the company's sustainable growth, stock investors focus more on the transaction premium of the company, and equity investors focus more on the liquidity premium. I once mentioned that transaction value is the mainstream value of modern financial markets. So, what is the liquidity premium? It is a form of transaction value, or what people commonly refer to as asset bubbles. If I were to define asset bubbles, it would be: the liquidity premium generated based on expectations and transactions.
After returning to China, I learned about the game of "Landlord Fight," where three players, two against one, create a very asymmetrical situation from the perspective of fairness. This is very similar to how modern companies operate, where capitalists, entrepreneurs, and equity investors act as major shareholders, issuing part of the shares to stock investors at high premiums. A year later, equity investments gradually fade out, completing the entire investment process, and internal peace is restored between the principal and the manager.
After returning to China, I learned about the game of "Real Money Landlord Fight," where three players, two against one, create a very asymmetrical situation from the perspective of fairness. This is very similar to how modern companies operate, where capitalists, entrepreneurs, and equity investors act as major shareholders, issuing part of the shares to stock investors at high premiums. A year later, equity investments gradually fade out, completing the entire investment process, and internal peace is restored between the principal and the manager.
Equity investors' pursuit of "freedom" far exceeds their desire for profit. In the trade-off between profit maximization and liquidity premium, equity investors prefer liquidity, while capitalists prefer profit maximization. Therefore, the game of "Landlord Fight" does not always result in winner-takes-all. After the company goes public, capitalists enjoy the highest book asset premium, but due to the lack of freedom, their book asset premium fluctuates with the ups and downs of stock prices. Capitalists not only bear the operational risks of the enterprise but also the transaction risks of stocks. After equity investors exit, stock investors come and go like revolving lanterns, and entrepreneurs can choose to leave perfectly after realizing equity incentives, except for capitalists who do not have such freedom. In this round of "Landlord Fight," the loser becomes the capitalist because the company's pursuit of profit maximization is both an incentive and a shackle.
Saying No to Winner-Takes-All
A company's development goes through three stages: start-up, growth, and maturity. Equity investors can choose to enter during the start-up phase and exit during the growth phase, abandoning the pursuit of profit in exchange for liquidity premium. This behavioral pattern sometimes also influences capitalists, turning them into equity investors, even entrepreneurs. In such a scenario,
The liquidity premium of modern companies comes from the capital market. This premium is related to the company's profits, but there is no linear relationship. The fact that the Growth Enterprise Market (GEM) soared on its opening day indicates that the premium a company gains after going public mainly comes from investors' irrational frenzy, as the growth premium represented by corporate profits has already been reflected in the issue price-to-earnings ratio. In reality, neither stock investors nor equity investors have the profit motive of capitalists and entrepreneurs. Although their returns are contingent upon the company's sustainable growth, stock investors focus more on the transaction premium of the company, and equity investors focus more on the liquidity premium. I once mentioned that transaction value is the mainstream value of modern financial markets. So, what is the liquidity premium? It is a form of transaction value, or what people commonly refer to as asset bubbles. If I were to define asset bubbles, it would be: the liquidity premium generated based on expectations and transactions.
If this is the first round of the game, the winners are ranked accordingly: capitalists enjoy the highest book premium, followed by equity investors, then entrepreneurs, and finally stock investors who bear the transaction risks. However, from the perspective of liquidity, equity investors exit at a premium and no longer bear the operational risks of the enterprise.
The exit of equity investment involves trade-offs. After painstakingly nurturing a company for years, choosing to exit at its most glorious stage means not taking away the company's profits and no longer sharing in its growth. This mindset can be interpreted through a rephrased famous poem: "Profits are indeed precious, but growth is even more valuable; if freedom is the goal, both can be forsaken." Here, "freedom" refers to the liquidity of capital, and the price paid for gaining "freedom" is neither past profits nor future growth, but rather what? It is the liquidity premium that the company gains after going public.
Definition of Bubbles
Definition of Bubbles
A company's development goes through three stages: start-up, growth, and maturity. Equity investors can choose to enter during the start-up phase and exit during the growth phase, abandoning the pursuit of profit in exchange for liquidity premium. This behavioral pattern sometimes also influences capitalists, turning them into equity investors, even entrepreneurs. In such a scenario, in the game of modern enterprises, it is not always winner-takes-all, and capitalists without "freedom" may easily be shackled. In the game of modern enterprises, it is not always winner-takes-all, and capitalists without "freedom" may easily be shackled.
Forum Signature: Orchid in the Deep Valley, Naruto White's Rebirth, Landlord Fight
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