Equity investment's pursuit of "freedom" far exceeds its 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" is not always a winner-takes-all scenario. After a company goes public, capitalists have the highest book asset premium. However, due to lack of freedom, their book asset premium fluctuates with the stock price. Capitalists not only bear the operational risks of the enterprise but also the trading risks of stocks. After equity investors exit, stock investors will come and go like a revolving door, and entrepreneurs can choose to cash out after realizing equity incentives. Only capitalists do not have this freedom. In this round of "Landlord," the loser becomes the capitalist because the company's pursuit of profit maximization is both an incentive and a shackle.
If this is the first round of the game, the winners are ranked as follows: the highest book premium belongs to the capitalist, followed by the equity investor, then the entrepreneur, and lastly, the stock investor who bears the trading risk. However, from the perspective of liquidity, equity investors exit at a premium and no longer bear the operational risks of the enterprise.
Saying no to winner-takes-all
The exit of equity investment involves trade-offs. After painstakingly nurturing a company for many years, choosing to exit at its most glorious stage means not taking away the company’s profits or sharing in its growth anymore. This mindset can be interpreted through rewriting a famous poem: "Profit is indeed precious, growth is even more valuable, but if it's for freedom, both can be discarded." Here, "freedom" refers to the liquidity of capital, and the price paid for obtaining "freedom" is neither past profits nor future growth. So, what is it? It's the liquidity premium that the company gains after going public.
The exit of equity investment involves trade-offs. After painstakingly nurturing a company for many years, choosing to exit at its most glorious stage means not taking away the company’s profits or sharing in its growth anymore. This mindset can be interpreted through rewriting a famous poem: "Profit is indeed precious, growth is even more valuable, but if it's for freedom, both can be discarded." Here, "freedom" refers to the liquidity of capital, and the price paid for obtaining "freedom" is neither past profits nor future growth. So, what is it? It's the liquidity premium that the company gains after going public.
If this is the first round of the game, the winners are ranked as follows: the highest book premium belongs to the capitalist, followed by the equity investor, then the entrepreneur, and lastly, the stock investor who bears the trading risk. However, from the perspective of liquidity, equity investors exit at a premium and no longer bear the operational risks of the enterprise. In modern enterprises' games, it is not always winner-takes-all; capitalists without "freedom" may very likely be shackled.
After returning home, I learned about the game of "Real Money Landlord." In a three-player game where two teams up against one, from the perspective of fairness, it is extremely asymmetrical. This is very similar to how modern enterprises operate. Capitalists, entrepreneurs, and equity investors sit at the table, issuing part of the shares to stock investors at high premiums. A year later, equity investments fade out, completing the entire investment process, and the internal peace between the owners and managers of the enterprise is restored.
Definition of bubbles
Enterprise development has three stages: start-up, growth, and maturity. Equity investors can choose to enter during the start-up phase and exit during the growth phase, giving up the pursuit of profit in exchange for liquidity premium. This behavior pattern sometimes also influences capitalists, turning them, and even entrepreneurs, into equity investors. In such cases, in the modern enterprise game, it is not always winner-takes-all; capitalists without "freedom" may very likely be shackled.
Enterprise development has three stages: start-up, growth, and maturity. Equity investors can choose to enter during the start-up phase and exit during the growth phase, giving up the pursuit of profit in exchange for liquidity premium. This behavior pattern sometimes also influences capitalists, turning them, and even entrepreneurs, into equity investors. In such cases, in the modern enterprise game, it is not always winner-takes-all; capitalists without "freedom" may very likely be shackled.
The liquidity premium of modern enterprises comes from the capital market. This premium is related to the company's profit, but there is no linear relationship. The fact that the GEM opened with a surge indicates that the premium obtained by the company after listing mainly comes from the irrational enthusiasm of investors, because the growth premium represented by corporate profits has already been reflected in the issue price-earnings ratio. In fact, neither stock investment nor equity investment has the profit motive of capitalists and entrepreneurs. Although their returns are premised on the sustainable growth of the enterprise, stock investors focus more on the transactional premium of the enterprise, and equity investors focus more on the liquidity premium of the enterprise. I once said that transaction value is the mainstream value of modern financial markets. So what is liquidity premium? It is a form of transaction value, which is commonly known as asset bubbles. If I were to define asset bubbles, it would be: liquidity premium generated based on expectations and transactions.
After returning home, I learned about the game of "Landlord." In a three-player game where two teams up against one, from the perspective of fairness, it is extremely asymmetrical. This is very similar to how modern enterprises operate. Capitalists, entrepreneurs, and equity investors sit at the table, issuing part of the shares to stock investors at high premiums. A year later, equity investments fade out, completing the entire investment process, and the internal peace between the owners and managers of the enterprise is restored.
Saying no to winner-takes-all
Definition of bubbles
The liquidity premium of modern enterprises comes from the capital market. This premium is related to the company's profit, but there is no linear relationship. The fact that the GEM opened with a surge indicates that the premium obtained by the company after listing mainly comes from the irrational enthusiasm of investors, because the growth premium represented by corporate profits has already been reflected in the issue price-earnings ratio. In fact, neither stock investment nor equity investment has the profit motive of capitalists and entrepreneurs. Although their returns are premised on the sustainable growth of the enterprise, stock investors focus more on the transactional premium of the enterprise, and equity investors focus more on the liquidity premium of the enterprise. I once said that transaction value is the mainstream value of modern financial markets. So what is liquidity premium? It is a form of transaction value, which is commonly known as asset bubbles. If I were to define asset bubbles, it would be: liquidity premium generated based on expectations and transactions.
Forum signature: If the Three Kingdoms, Qingyun Records, Qingyun Records, Landlord
Shenzhen Ultrasonic