[rooshdi]

Yes, but doesn't the decreasing importance of public offerings hurt the general public now? Seems like the rich investors of private markets are going to have an ever-growing first-mover advantage in rapid-growth companies while the general public is going to be left with the stagnant or depreciating left overs. This trend may result in an even greater divide between the elite and middle to lower class.

[pg]

Only insofar as index funds buy stock in newly public cos. Retail investors who do it a la carte are going to net hurt themselves anyway. And IIRC not many index funds buy new offerings.

[rooshdi]

Retail investors who do it a la carte are going to net hurt themselves anyway.

This assumes there aren't any adept retail investors in the public market. There will still be an increasing number of savvy retail investors who will now be inhibited from investing in one of the most symbiotically valuable relationships in an economy, one between young organizations in need of capital and public investors looking for more relevant early investments. Instead, the growth of the private markets will dilute these investment opportunities for the public and now offer them to already rich investors. Shouldn't organizations and economies work to provide more integral investment opportunities to the general public instead of increasingly reserving these for the fortunate few?

[rooshdi]

To whoever down voted, I welcome you to reply and support your stance.

[lsc]

this is assuming that the total expected return on those rapid-growth companies is greater than the total expected return on publicly traded companies.

I'm not sure that is the case. For every amazon, there are thousands of pets.com.

Now, amazon did make a whole lot of money, so I could be wrong; compiling reliable statistics from private companies is notoriously difficult. Personally, I think this lack of transparency is going to push the market more towards focusing on getting money from investors rather than on actual profits.

[rooshdi]

Although start-up investments may be more volatile than established company investments, the fortunate few elite will still sustain an ever-growing head start over the general public when investing. Plus, the original incentives of founders publicly trading their companies in return for critical funding needed for growth are now being replaced by rich investors who just want a large return once private market valuations have stagnated. The value of the public market is shifting from growing companies to growing wealthy investors' wallets. These developments are quite contrary to the original intentions of the public markets and are increasingly depreciating the opportunities given to the general public.