No Alpha Left in Public Markets (apolloacademy.com)
- Reference: 0179106058
- News link: https://slashdot.org/story/25/09/09/1126247/no-alpha-left-in-public-markets
- Source link: https://www.apolloacademy.com/no-alpha-left-in-public-markets/
> There are fewer public companies to invest in, and firms that decide to do an IPO are getting older and older.
>
> In 1999, the median age of IPOs was five years. In 2022, it was eight years, and today, the median age of IPOs has increased to 14 years.
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> The rise in the age of companies going public is not only a result of the Fed raising interest rates in 2022, but also the consequence of more companies wanting to stay private for longer to avoid the burdens of being public.
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> Combined with the domination of passive investing, failure of active managers and high correlation in public markets, and high concentration in a few stocks, the reality is that there is no alpha left in public markets.
[1] https://www.apolloacademy.com/no-alpha-left-in-public-markets/
WTF is alpha (Score:2)
"Alpha is a measure of an investment's performance that indicates its ability to generate returns in excess of its benchmark." - from [1]here [investopedia.com]. So it means your ability to beat the market by picking good stocks.
[1] https://www.investopedia.com/terms/a/alpha.asp
Re: (Score:2)
I'm glad I'm not the only one who had no idea what that statement meant.
I'm still left puzzled though. Is this person saying there arent any stocks one can make money from anymore? That doesnt seem at all true.
Private wealth (Score:4, Insightful)
No mention of private wealth and private equity markets being able to pump significantly more money into private companies and reduce their need to go public, as well as being able to manipulate public markets to ensure that no strong competitors can emerge.
Pumping his business (Score:2)
Oh, the guy who runs a firm investing in private capital wants you to think that there's no money to be made on public companies? Color me surprised.
It's not interest rates (Score:2)
> In 1999, the median age of IPOs was five years. In 2022, it was eight years, and today, the median age of IPOs has increased to 14 years.
>> The rise in the age of companies going public is not only a result of the Fed raising interest rates in 2022, but also the consequence of more companies wanting to stay private for longer to avoid the burdens of being public.
Interest rates were a bit higher in 1999 than they are now. Other policies and tax rates have changed since then, but everyone k
Pact with the investors (Score:3)
In many cases, you're trading money for control, which can lead to you being forced to make very bad decisions to appease the investors and shareholders, after all they want the number to go up, not necessarily that you thrive.