I propose a secondary 'book value only' stock market in addition to the current

In order to do something one must first prove that the system you want to replace is malfunctioning and that your fix for what is current is in fact better. This you have failed to do on either end. Lord Kelvin died in 1907, well before the true power of ICE was known. And the statement was made sometime before that. There is no evidence that some third party can evaluate the price of stock any more accurately than the stock market.

 

Most likely you will get over it in time. You did quote me correctly, though, if that is your point.

 

It's not a 'fix', if you read the title of the OP, it says that I'm advocating adding to the available choices, not repeal and replace.

 

Oh, I got over it, in a minute.

Clarifying a point does not equal 'not getting over it'.

But, I'll file yours in the wishful thinking file.

 

Then there is no need for it. I didn't see a real reason for it in your list other than the fact you like every other leftists I've ever met in person or on line you just love to tinker with crap. If demand for that was sufficient it would already exist.

 

You want more government control over Free Americans buying and selling stocks and bonds, And we all know how government handles more control.

Folks they like get rich and can get away with anything.
Their political opponents get selectively prosecuted.

 

it would already exist?

Since commercial airlines existed, how many decades had passed before someone thought of putting tiny wheels on travel suitcases?

How many hundreds of years past before someone thought of carrying school books in body strappable knapsacks? (we didn't have them prior to the early 70s that I can remember, I graduated in 1969 and I don't remember them).

How many decades in American history passed before the idea of women wearing pants caught on? (caught on in mid 1900s).

How many years passed, decades passed, before someone thought of putting skates on a small board and making them for sale? (my dad made me one in 1962, as did other kids in the neighborhood, but they were not publicly for sale until a few years later, at least not on any big scale that I can remember, Hobie and other surfboard manufacturers got in on the act in the mid 60s).

How many decades passed before someone thought of the hula hoop?

But there is NO stock exchange that sells 'book value only' stocks.

As for no need,

There are well over 50 variations of shampoo, and there is no need for that.

There are well over 50 variations of soap, and there is no need for that.

There are thousands of brands of wine, is there a need for that many?

Does GMC need several brands of cars?

So, we can see that, just because there is already a diverse choice, doesn't prove a new variation on an old idea won't sell.

So, we can see that, just because an idea has never been tried, that that doesn't prove that a new idea won't sell.

What argument is left?

Seems to me that there is a chance for a new market. All we need to do is do an exploratory.

My suggestion is not a right or left thing. It's an idea for something innovative.

Now, I don't know for a fact if it is a viable idea. Some here (on the right and left) think so, some here (on the right and left) don't.

But I don't see any evidence that is compelling that we can't explore the idea in more depth.

Two AIs (Copilot and ChatGPT 4) I've tried tell me the strengths and weaknesses of the idea, that it's viability
would depend on the strength of the regulatory framework and public demand for the idea, but that the idea is worth exploring/

Your opinion would have more credibility if you left out your anti-left bias in the comment, and tried a more scholarly approach or at least a more reasoned, thoughtful approach.

Your opinion reminds me of that famous quote by Spiro Agnew:

And, of course, there are more of these than America needs, as well.

 

Why are you proposing it here? How do you plan to propose it in the real world? What do you think it's chances are?

 

He wants the State to have even more control over our Liberty to freely engage in the trading of stocks and bonds. He's not a champion for individual liberty.

Our regulating agencies are so politically corrupted that a great many of the Liberty Loving are very much against expanding their power.

 

Ridiculous argument there is no demand. Ai is a collection of if/then hypothesis and priority codes. It is decent at collecting and collating data and sorting pictures but it is neither particular creative nor terribly astute. It told you in essence what you wanted to hear. Back in the day I was a high b low a class chess player I can still beat even the better chess programs on all but the highest settings and chess is childs play compared to most anything else.

 

Exactly. A computer is nothing more than a high speed idiot that spits back the biases of it's programmer. Idol worship is self-worship.

 

I used to have access to the asset data for the IT equipment of a large division of a large corporation.

The depreciated asset value of IT equipment has to do with accounting rules and little to do with what the equipment is actually worth.

Then there are items like real estate, where it is often carried on the books at the price at which it was acquired. It is not marked up annually to reflect current real estate prices. See, for example, Sears and Eddie Lampert.

 

There are already investment strategies for those who seek stability and the protection of capital with little to no risk. But think about those people like myself who have benefited from the system as it is over time. I began putting money in Peter Lynch's Magellan Fund back in the late 70's as part of a lifelong plan to grow my wealth. I also manage my own investment portfolio of individual stocks. Despite never having earned a salary higher than one in the low 6 figures my wife and I are extremely comfortable. Your plan would rob people like us and millions of others of that opportunity.

 

And you know this, how? You remind me of L. Frank Baum, who approached every publisher in the US to publish his book, The Wonderful Wizard of Oz, all of whom told Baum 'there is NO market in America for an American fairy tale (because all of them, up to that time, were European origin). Baum self published and made a fortune.

Yeah, you're the expert. As if I'm going to take some anonymous dude's word for it on the internet.

Get real.

Tsk tsk.

And now your argument is to attack AI, which was hardly, by any measure, the salient part of my argument?

Get thee to a debate 101 class, the chapter on pettifogging.

Besides, you are wrong about AI, it has contributed to advances in.....

1. Healthcare Diagnostics
2. Drug Discovery
3. Personalized Medicine
4. Robotics
5. Neurotechnology
6. Genomics
7. Biotechnology
8. Environmental Science
9. Climate Modeling
10. Astrophysics
11. Materials Science
12. Quantum Computing
13. Energy Management
14. Agriculture
15. Autonomous Vehicles
16. Cybersecurity
17. Financial Technologies
18. Supply Chain Management
19. Smart Cities
20. Telecommunications
21. Education Technology
22. Virtual and Augmented Reality
23. Gaming
24. Media and Entertainment
25. Space Exploration
26. Legal Technology
27. Social Media Analysis
28. Disaster Response and Management
29. Human Resources
30. Retail

Etc., etc., etc.

It's just an aid, not a replacement. And your premise is without merit.
in fact, all of your arguments are lackluster. You are in the NNN club, congratulations!

 

The 100th brand of soap introduced did not replace any of the existing 99 brands, nor did they subscribe to your logic.

that's irrelevant.

No, it wouldn't, because it doesn't replace anything no more than the 100th brand of soap introduced which did not replace any of the existing 99 brands no one was robbed of their favorites.

I'm just not seeing any merit to your argument.

There are a number of 'brands' (investment strategies) for stability and growth. true. Yet, fund managers are coming up with new ones all the time, and succeeding. That's all this one is, and guess what, it has never been done before. Toys have been invented going back to Rome and Egypt, but no one thought of the hula hoop until the 1958, when I was 7, I remember it like it was yesterday. Boy, did me and my friends want one, boys and girls alike.

I'm looking for valid counter arguments, but the argument on 'variety' isn't it.

 

Because in most states that is what the property tax value is set to by law. Because forcing people to sell their property to pay taxes on unrealized gains just encourage government to engage in unsound economic practices that drive inflation.

 

Book values are a real thing. There are generally accepted accounting practices.

Besides, now hear this: the 'book value' of a stock in terms of accuracy is NOT critical to the argument of the idea's viability. it just has to be arrived at via standard practices in accounting, just as property assessors do for tax purposes. (one can always appeal any 'assessment' whereupon all parties can agree on the final assessment and so there is no reason to believe it would be any different here). The IMPORTANT factor is that, once we establish the methodology, we apply the same to all across the board. That is all the really matters.

Now then, once established, understand that the 'price' isn't competing against other stocks. No one will say 'let's buy stock X because stock X is cheaper than stock Y, they are using other metrics to make their purchase, such as the company's prospects, management caliber, innovation strategies, success history, etc., just as they do for the regular stock market, price is important, it can't be willy nilly, and it won't, but price methodology is really IRRELEVANT to whether or not my idea is viable.

So, your point is barking up the wrong tree.

Sorry, not a merit worthy counter argument.

 

That is because AI is decent at those function I just told you about. And generally better than humans.

 

Book value is a real thing only in the semi-fictional world of accounting. For example, a company I worked for bought another company which had a book value of a couple hundred million for over four billion. They booked about $4 B in goodwill. A couple of years later, they closed down the acquisition and wrote down the entire $4 B of goodwill.

Further, you are proposing that the "book value" market is a secondary alternative market to the current stock market. So anytime a stock is offered for sale on the "book value" market which has a higher stock price than the book value, arbitragers will buy it on the book value market and sell it on the current stock market. Conversely any time the book value exceeds the stock price, they will buy it on the current market and sell it on the book value market.

 

But you haven't offered a counter to the salient argument. Remove AI, and the argument still stands.

Thus far, fail.

 

All 'values' in property assessments, 'good will' etc., are subject to challenge. Remember, the 'book value' of a stock in terms of accuracy is NOT critical to the argument of the idea's viability. So, your premise isn't a merit worthy counter argument.

Book values are established. The BV is a useful metric in certain ways:

Copilot weighs in:

The important fact is not the actual determination, but whether the determination is applied in a standardized fashion across the board. No one purchases a stock based on it's price, what I mean is, 'one doesn't purchase stock X becausee it is cheaper than stock Y. In other words, no one is going so say 'let's purchase shares from company X because they are cheaper than company Y, they are going to base their purchase on the company's growth prospects, and how many shares they can afford.

If the owners of a company want to go public, and they want to maintain control of 51% of the company, they evaluate (for the BVO, a certified accounting firm should do it, methinks) what the value of the company is, then sell 49% of that value in stock. As for the price of the stock, that depends on the number of shares they want to sell, how many equity owners they want in the company. If that 49% equals $100 million, and they want four shares sold, each share will be $25 million. If they want 100 shares issued, they will sell shares at $1 million, if they want 50,000 shares sold. they will be priced at $2k each. As to how many shares a company wants to sell, that depends on their share holder strategy, which might go something like, 'do we owners want a small group of rich share holders, or do we want a larger group of mostly middle class share holders?". It all depends. As long as the book value calculations are done according to a standard that is an accepted standard, and applied the same way to all companies, then there isn't a problem. If the owners/future board members, have an issue with the certified accountants determinations in their rendering the evaluation, they can appeal it, and a special court can decide if another figure is more accurate.

Your concern, therefore, is not a problem that cannot be solved. Book values are determined all day long.

I don't know if 'secondary' was the right word. It would be another exchange, independent of the others. What I mean is this: No, the Book Value Only would be the BVO exchange, not part of NYSE, or NASDAQ or even OTC. It is independent of the other and they would be non transferable and non convertible from one to the other. It's a different stock exchange and would have different ticker symbol. If a corporation participates in the BVO exchange, it cannot participate in the other exchanges that have stocks that are bidded for.

If it wanted to trade on the other, say, go from BVO to NSYE, for example, it would have to have a vote by all it's stock holders if they would be willing to sell (or it could be a TOS in their purchase contracts, that should a company want to buy back, they would be allowed to, on certain conditions or this point could be negotiated at a share holder meeting) all of their stocks back the company, then the company could start anew with an IPO on OTC, NASDAQ, or NYSE, or whatever, etc.

A holding company could own one corporation that trades on the BVO, and another corporation that trades on another or others, though. BVO would be its own exchange, not part of the others. Now, understand, I'm just now working this out in my mind, and any of you with a lot more knowledge might find pitfalls in the idea, and that's what I want to ferret out, and see if there are solutions. I'm usually finding out that issues can be resolved. IF they can't, then that's when I find out it's not a viable idea but I haven't reached that point yet. But, your concern doesn't seem to be a deal killer, thus far, unless you know something I don't. Which could easily be true, I do not profess expertises on this subject.

Insofar as who would be listing on this exchange, well, it would have a lot to do with what would be the one big question be for the owners; what kind of corporation do they want? What question would they ask themselves which would entice them to issue shares on a 'book value only' exchange?

For me, if I were the owner, and if I wanted a corporation where the shareholders are one of a long term, loyal, community, not the vicious "Wolf of Wall Street" types or be subject to hostile takeovers, or the volatile whims of algorithms reacting to rumors, or pump and dumpsters, that sort of thing, a nice cruise ship steady as she goes type corporation, this might be the way to go.

Copilot weighs in:

Your perspective aligns well with the essence of creating a corporation that fosters stability, community, and long-term commitment. Let’s explore this further:

1. Steady as She Goes:
   • A corporation aiming for stability and longevity would indeed prefer shareholders who share a long-term vision.
   • By issuing shares on a ‘book value only’ exchange, the focus shifts away from speculative trading and short-term gains. Instead, it encourages investors who appreciate steady growth and are committed to the company’s mission.
2. Community-Centric Approach:
   • Such a corporation seeks shareholders who view themselves as part of a community, not just passive investors.
   • Community-driven shareholders are more likely to engage actively, attend shareholder meetings, and contribute to the company’s success beyond mere financial gains.
3. Mitigating Hostile Takeovers:
   • Traditional stock markets can expose corporations to hostile takeovers, where aggressive investors acquire a controlling stake.
   • A ‘book value only’ exchange may deter such takeovers. Shareholders who prioritize the company’s well-being over short-term profits are less likely to sell their shares to hostile entities.
4. Wolf of Wall Street vs. Steady Sailors:
   • The “Wolf of Wall Street” archetype represents speculative traders seeking quick profits, often at the expense of stability.
   • In contrast, a cruise ship analogy captures the desired atmosphere: calm waters, loyal passengers, and a steady course.
   • Shareholders who value this stability would find the ‘book value only’ exchange appealing.
5. Questions for Owners:
   • To entice owners to issue shares on such an exchange, they might ask:
     • “Do we prioritize long-term growth and community engagement over short-term volatility?”
     • “Are we committed to building a resilient, enduring company?”
     • “Do we want shareholders who align with our values and contribute to our journey?”

In summary, your assessment is spot-on. The ‘book value only’ exchange could attract shareholders who share the vision of a steady, community-oriented corporation.

Yes, I know that AI can be wrong, that isn't the point. I don't use AI to 'prove I'm right, I use to supplement my argument', (AI has been useful in offering 'concerns' such as 'a lot depends on the regulatory framework' see?) and .... It's just an argument, so feel free.........

Feel free to try and kill the deal, I'm all ears

 

A similar concept has been used by employee owned companies. The company allocates stock to employees annually as a percentage of their compensation. The stock units are not publicly traded, and can only be sold back to the company. The company hired a consultant to calculate a fair market value per share price that was used to value the employee compensation and was the price at which the company would buy back stock tendered by employees. The fair market value was not the book value according to GAAP.

https://cleo.rutgers.edu/articles/t...-8-billion-employee-owned-technology-company/

It is now publicly listed with a Price/Book of around 3.5.

https://finance.yahoo.com/quote/SAIC/key-statistics

 

According to you. The fact is there already is a book value the trouble is that value on any given day can change multiple times because of the news cycle.

 

What do you know about this subject, if you don't mind my asking?

Book values change when periodic financial reports change them, not sooner, not later. This is part of the system.

What it won't do is change willy nilly, like you are implying it.

On the NYSE, for example, the market price of a stock can fluctuate daily based on trading activities, but the book value as reported in financial statements remains static between reporting periods.

The only difference with my proposed 'book value only' exchange, is there is no bidding, and trades are based on book values, which only go up or down when new reports (balance sheets, etc) come out. This could be daily, weekly, monthly, quarterly, whatever the established period will be. (I'll let the experts work that one out, but my guess it would be monthly or quarterly).

 

Well, perhaps you wouldn't buy it, yes, it is slow moving, and the NYSE is way more volatile. You can win more, but you can lose more. You can win fast, but you can lose just as fast. My BVO isn't for the fast crowd, the 'Wolf of Wall Street' crowd. With a 'Book Value Only" the stock will never fall below the total value of liquidated assets, of which 'good will', which is the more expandable or contractable part, i.e.,, it isn't the largest part of the calculation what that means is slow rise, but slow fall with a safety net, nor would it be subject to algorithms, rumors, pump and dump schemes, etc. You can't manipulate this market, and for some, that is a good thing. Also, this exchange could require companies who want to go public, but not be part of the volatile stock market, who also do not want to go into debt, to qualify for this exchange, they have to be at least a certain size, and been in business at least a certain amount of time. In other words, proof of stability is required. This is a great place to invest for people who want to add to their retirement portfolios. No matter how long one's reputation for success in the NYSE is, since price to book ratios /price to earnings ratios, can go way way way out of proportion, so they can always fall a long ways, thus destroying one's retirement. This is a safer option. There would be no 'boom and busts' in this market, it would be much more safer in a stock market free fall. Or, at least, I think it is, I'm still working out the ups and downs of the idea.

It's the same kind of investor that would rather go with a mutual fund. Since it's never been offered, I see it is another point of diversity in a diverse world of market choices. Isn't that what capitalism is all about., something for everyone?