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Stocks for the Long Run

In theory, a share of stock is worth the present value of all of its future cash flows. A dollar of earnings today is worth more than a dollar of earnings in 10 years, because you use some non-zero discount rate in computing the present value.

So, in theory, every investor, whether their holding period is a millisecond or a decade, should care equally about the long-term cash flows of the company, because those cash flows determine the future price of the stock at every moment, and the way any stock investor makes money from their investment is by selling the stock.

In practice nobody really believes this in their bones.

Wall Street and AI Startups Are Fighting Over Entry-Level Quants

Anthropic is actively recruiting quant researchers from Wall Street, offering competitive compensation packages that include equity. The company is expanding its recruitment efforts globally, with events in London following a successful mixer in Manhattan. Anthropic is seeking individuals with rigorous analytical thinking and empirical research methods to develop safer and more capable AI systems. The company has hired former Jane Street employees Aron Thomas and Charles Guo, who were drawn to the potential impact of AI on the world.

Unicorns May Throw a Lifeline to Stock Analysts

If the $5 trillion of value locked in unicorns eventually generates trading commissions and ancillary revenue through tokenization, it would create a massive new earnings stream for research departments. In a world where private is increasingly the new public, research departments that fail to adapt risk becoming as obsolete as the shrinking roster of companies they currently cover. 

Citigroup Sees Bigger IPOs as Private Deals Bulk Up Valuations

The market for private secondary sales has expanded to around $60 billion, up from $50 billion last year.

Private Markets Get More Public

The line between private and public markets is blurring, with private companies like SpaceX, Stripe, and OpenAI becoming more accessible to individual investors. These companies, though still private, have shares traded on platforms like Forge and EquityZen. These platforms are lowering the minimum investment to $5,000, making it easier for accredited investors (those with a net worth of over $1 million or earning at least $200,000 annually) to buy shares in high-risk, late-stage private companies.

While private companies don't file public financial statements, their stock prices are increasingly made available, even through Yahoo Finance. This development allows individual investors to trade shares of companies that were once off-limits, although the stock prices may be less reflective of true market values due to limited liquidity and small trading volumes. There are now three categories of companies: public companies (traded on stock exchanges), private-is-the-new-public companies (privately held but traded on platforms), and truly private companies (which don’t trade their shares).

Stocks Fall as Traders Map Out Game Plans for CPI: Markets Wrap

Market Movements:

   Stocks fell, and bond yields rose as Wall Street awaited inflation data (CPI) to determine if the Federal Reserve will cut or hold interest rates next week.