Equity investment's pursuit of "freedom" far exceeds its desire for profit. Among the choices between profit maximization and liquidity premium, equity investors prefer liquidity while capitalists prefer profit maximization. Therefore, in the game of "Landlord," it is not always the case that the winner takes all. After a company goes public, capitalists have the highest premium on paper assets, but due to lack of freedom, their asset premiums fluctuate with stock prices. 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 withdraw perfectly after the realization of equity incentives. Only the capitalists do not have this freedom. In this round of "Landlord," 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." In a three-person game where two teams play against one, from a fairness perspective, it is very asymmetrical. This is very similar to modern enterprises where capitalists, entrepreneurs, and equity investors sit at the table and issue part of the shares to stock investors at a high premium. A year later, equity investment fades out, completing the entire investment process, and the internal peace between the owners and managers of the enterprise is restored.
Equity investment's pursuit of "freedom" far exceeds its desire for profit. Among the choices between profit maximization and liquidity premium, equity investors prefer liquidity while capitalists prefer profit maximization. Therefore, in the game of "Landlord," it is not always the case that the winner takes all. After a company goes public, capitalists have the highest premium on paper assets, but due to lack of freedom, their asset premiums fluctuate with stock prices. 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 withdraw perfectly after the realization of equity incentives. Only the capitalists do not have this freedom. In this round of "Landlord," the loser becomes the capitalist because the enterprise's pursuit of profit maximization is both an incentive and a shackle.
The exit of equity investment involves trade-offs. After painstakingly cultivating an enterprise for many years, choosing to exit at the most glorious stage of the enterprise means neither taking away the enterprise's profits nor sharing in its growth any longer. This mindset can be interpreted by rewriting a famous poem: Profit is indeed precious, growth is more valuable, if for the sake of freedom, both can be discarded. Here, "freedom" refers to the liquidity of capital, and the price of obtaining "freedom" is neither past profits nor future growth. So what is it? It is the liquidity premium obtained by the enterprise after going public.
The exit of equity investment involves trade-offs. After painstakingly cultivating an enterprise for many years, choosing to exit at the most glorious stage of the enterprise means neither taking away the enterprise's profits nor sharing in its growth any longer. This mindset can be interpreted by rewriting a famous poem: Profit is indeed precious, growth is more valuable, if for the sake of freedom, both can be discarded. Here, "freedom" refers to the liquidity of capital, and the price of obtaining "freedom" is neither past profits nor future growth. So what is it? It is the liquidity premium obtained by the enterprise after going public.
Definition of bubbles
The development of an enterprise 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 behavioral pattern sometimes also spreads to capitalists, turning even capitalists and entrepreneurs into equity investors. In such a situation, in the card game of modern enterprises, it is not always the case that the winner takes all, and capitalists without "freedom" are likely to be shackled.
In the card game of modern enterprises, it is not always the case that the winner takes all, and capitalists without "freedom" are likely to be shackled.
The development of an enterprise 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 behavioral pattern sometimes also spreads to capitalists, turning even capitalists and entrepreneurs into equity investors. In such a situation,
If this is the first round of the game, the winners are ranked accordingly: the capitalists with the highest premium on paper assets, followed by equity investors, then entrepreneurs, and finally stock investors who bear 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.
The liquidity premium of modern enterprises comes from the capital market. This premium is related to the enterprise's profit, but there is no linear relationship. The fact that the Growth Enterprise Market (GEM) opened with a surge indicates that the premium gained by enterprises after going public mainly comes from investors' irrational frenzy, as the growth premium represented by enterprise profits has already been reflected in the issuance P/E 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 transactional premium, and equity investors focus more on liquidity premium. 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.
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 enterprise's profit, but there is no linear relationship. The fact that the Growth Enterprise Market (GEM) opened with a surge indicates that the premium gained by enterprises after going public mainly comes from investors' irrational frenzy, as the growth premium represented by enterprise profits has already been reflected in the issuance P/E 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 transactional premium, and equity investors focus more on liquidity premium. 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-person game where two teams play against one, from a fairness perspective, it is very asymmetrical. This is very similar to modern enterprises where capitalists, entrepreneurs, and equity investors sit at the table and issue part of the shares to stock investors at a high premium. A year later, equity investment fades out, completing the entire investment process, and the internal peace between the owners and managers of the enterprise is restored.
If this is the first round of the game, the winners are ranked accordingly: the capitalists with the highest premium on paper assets, followed by equity investors, then entrepreneurs, and finally stock investors who bear 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
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