, boerse-express
Daeubner: My Nobel Prize in Economics
Here is a short riddle for you. Let’s suppose I own a company and I take it public on the NASDAQ. I keep 51% of the shares, which is only legal on the NASDAQ, and I IPO the other 49%. So far, so good. Now, I choose not to pay a dividend, neither to myself nor the shareholders.
Basically, if you bought the other 49% of the company, if it weren’t for M&A they would be useless. Why? Well, I don’t pay you a dividend, and I am not interested at all in the other 49%, since I get to keep all the profit anyways. Your stake in the company, your 49%, merley have a value, if somebody wanted to buy the whole company, and he would have to pay the book value price.
Furthermore, this means that an IPO should only be made, once you reach the plateau of the business cycle. Once you sell the stake of your own company, there is no further profit to be extracted from those 49 percent. Therefore, you want the IPO price to be as high as possible. If capital is needed for a horizontal or vertical merger, or simply an expansion of productivity, it ought to be raised privatley.
Once your company does reach the plateau of the business cycle, i.e. the market has been saturated, you do want to sell nearly half of the company, since you do create money out of thin air anyways. There is no downside for the owner, operating with 51% and all profits does not change your daily working routine.
Once this idea spreads, it is quiet clear that the volatility in the markets has to decrease, and detrending will take place. The value of companies can and will not change by 3-5% on a daily basis, which is quiet irrational. This means, the book value of the company can and will change but only of the viewpoint of M&A, which is the reason why a market place exists anyways. Therefore hypes and crashes ought to be eliminated, and speculative returns will decrease.
Basically, if you bought the other 49% of the company, if it weren’t for M&A they would be useless. Why? Well, I don’t pay you a dividend, and I am not interested at all in the other 49%, since I get to keep all the profit anyways. Your stake in the company, your 49%, merley have a value, if somebody wanted to buy the whole company, and he would have to pay the book value price.
Furthermore, this means that an IPO should only be made, once you reach the plateau of the business cycle. Once you sell the stake of your own company, there is no further profit to be extracted from those 49 percent. Therefore, you want the IPO price to be as high as possible. If capital is needed for a horizontal or vertical merger, or simply an expansion of productivity, it ought to be raised privatley.
Once your company does reach the plateau of the business cycle, i.e. the market has been saturated, you do want to sell nearly half of the company, since you do create money out of thin air anyways. There is no downside for the owner, operating with 51% and all profits does not change your daily working routine.
Once this idea spreads, it is quiet clear that the volatility in the markets has to decrease, and detrending will take place. The value of companies can and will not change by 3-5% on a daily basis, which is quiet irrational. This means, the book value of the company can and will change but only of the viewpoint of M&A, which is the reason why a market place exists anyways. Therefore hypes and crashes ought to be eliminated, and speculative returns will decrease.