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 card game of "Landlord Fighting" is not always a winner-takes-all situation. After a company goes public, capitalists have the highest book asset premium, but due to lack of freedom, their book asset premiums fluctuate with stock price volatility. Capitalists not only bear the operational risks of the enterprise but also the transaction risks of stocks. After equity investors exit, stock investors will come and go like a carousel, and entrepreneurs can choose to exit perfectly after the realization of equity incentives. Only the capitalists do not have this freedom. In this round of "Landlord Fighting", the loser becomes the capitalist because the enterprise's pursuit of profit maximization is both an incentive and a shackle.
After returning home, I learned about the game of "real money Landlord Fighting". In a three-person card game where two players fight one, from a fairness perspective, it is very asymmetrical. This is quite similar to modern enterprises' playstyle, where capitalists, entrepreneurs, and equity investors act as hosts, issuing part of the shares at a high premium to stock investors. A year later, equity investments gradually fade out, completing the entire investment process, and peace is restored between the owners and managers within the company.
The liquidity premium of modern enterprises 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) opened with a skyrocketing boom indicates that the premium obtained by companies after going public mainly comes from the irrational madness of investors, as the growth premium represented by corporate profits has already been reflected in the issue price-earnings ratio. Stock investment and equity investment actually do not have the profit motive of capitalists and entrepreneurs. Although their gains 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, or what people commonly refer to as an asset bubble. If I were to define an asset bubble, it would be: liquidity premium generated based on expectations and transactions.
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 card game of "Landlord Fighting" is not always a winner-takes-all situation. After a company goes public, capitalists have the highest book asset premium, but due to lack of freedom, their book asset premiums fluctuate with stock price volatility. Capitalists not only bear the operational risks of the enterprise but also the transaction risks of stocks. After equity investors exit, stock investors will come and go like a carousel, and entrepreneurs can choose to exit perfectly after the realization of equity incentives. Only the capitalists do not have this freedom. In this round of "Landlord Fighting", the loser becomes the capitalist because the enterprise's pursuit of profit maximization is both an incentive and a shackle.
Saying no to winner-takes-all
The development of enterprises has three stages: start-up period, growth period, and maturity period. Equity investors can choose to enter during the start-up period and exit during the growth period, giving up the pursuit of profit in exchange for liquidity premium. This behavioral pattern sometimes also infects capitalists, turning them and even entrepreneurs into equity investors. In such a case,
If this is the first round of the game, the winners are ranked sequentially: the highest book premium belongs to the capitalists, followed by equity investors, then entrepreneurs, and finally stock investors bear the transaction risk. 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 choices. After painstakingly cultivating the enterprise for many years, choosing to exit at the most glorious stage of the enterprise, neither taking away the enterprise's profit nor sharing in its growth anymore, this mindset can be interpreted by rewriting a famous poem: Profit is indeed precious, growth is even more valuable, if for the sake of freedom, both can be discarded. Here, "freedom" refers to the liquidity of capital, and the consideration for obtaining "freedom" is neither past profit nor future growth. What is it then? It is the liquidity premium obtained by the enterprise after going public.
The exit of equity investment involves choices. After painstakingly cultivating the enterprise for many years, choosing to exit at the most glorious stage of the enterprise, neither taking away the enterprise's profit nor sharing in its growth anymore, this mindset can be interpreted by rewriting a famous poem: Profit is indeed precious, growth is even more valuable, if for the sake of freedom, both can be discarded. Here, "freedom" refers to the liquidity of capital, and the consideration for obtaining "freedom" is neither past profit nor future growth. What is it then? It is the liquidity premium obtained by the enterprise after going public.
Definition of bubbles
The liquidity premium of modern enterprises comes from the capital market. This premium is related to the company's profits, but there is no linear relationship. The fact that the GEM opened with a skyrocketing boom indicates that the premium obtained by companies after going public mainly comes from the irrational madness of investors, as the growth premium represented by corporate profits has already been reflected in the issue price-earnings ratio. Stock investment and equity investment actually do not have the profit motive of capitalists and entrepreneurs. Although their gains 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, or what people commonly refer to as an asset bubble. If I were to define an asset bubble, it would be: liquidity premium generated based on expectations and transactions.
If this is the first round of the game, the winners are ranked sequentially: the highest book premium belongs to the capitalists, followed by equity investors, then entrepreneurs, and finally stock investors bear the transaction risk. However, from the perspective of liquidity, equity investors exit at a premium and no longer bear the operational risks of the enterprise.
The development of enterprises has three stages: start-up period, growth period, and maturity period. Equity investors can choose to enter during the start-up period and exit during the growth period, giving up the pursuit of profit in exchange for liquidity premium. This behavioral pattern sometimes also infects capitalists, turning them and even entrepreneurs into equity investors. In such a case, in the modern enterprise's card game, it is not always a winner-takes-all situation, and capitalists without "freedom" are likely to be shackled.
Saying no to winner-takes-all
After returning home, I learned about the game of "Landlord Fighting". In a three-person card game where two players fight one, from a fairness perspective, it is very asymmetrical. This is quite similar to modern enterprises' playstyle, where capitalists, entrepreneurs, and equity investors act as hosts, issuing part of the shares at a high premium to stock investors. A year later, equity investments gradually fade out, completing the entire investment process, and peace is restored between the owners and managers within the company. In the modern enterprise's card game, it is not always a winner-takes-all situation, and capitalists without "freedom" are likely to be shackled.
Forum Signature: Flowers disappear at the time airport,穿越之柳梦江淮, Landlord Fighting
Shenzhen Ultrasonic