If you know me well you know I have been preaching about the need to find new ways to form capital ever since Wall Street abandoned its role of supporting growth in favor of the "Trader's" model during the Internet Crash of 2000. My view is that this makes Wall Street a Casino and playing in that Casino is a fool's paradise.
Think about it- Wall Street lures in billions through 401K and other consumer and corporate investment programs that are set up to be about buying and holding. They pay their sages to speak to America about the value of long term investing...they hire brokers who spend all of their time telling customers to stay in the market!
Then they build these trading rooms that short every stock the 401K folks are holding as soon as there is any kind of bad news about any stock. The cool thing (if you are a trader or making profits with traders) is that in this age of information, all one needs to do stay tuned to the computer screen to know who your friends are shorting. In the old days (think Boesky/Miliken) you had to use the phone and form a conspiracy to get that kind of information and you ended up in jail.
So, what better business to be in? I have friends making fortunes doing this and God Bless 'em because they are very generous with the millions they make shorting your 401K investment program.
But, if you are like me and your heart and soul and wallet are invested in developing cool new things with entrepreneurs and small companies, you feel a strong need for a capital formation system other than the big casino in NY since it does not help new companies any more.
Ironically those companies in need of growth capital are mostly in CA, so solving this is a CA issue of the first order.
I'll write more on this later, but the essence of the idea is for CA to pass legislation that supports its growth engine and does not rely on Wall Street. We need to look to Asia and the Mideast for support from countries and organizations that appreciate product and service development and invest carefully for the long haul and based on revenues and revenue driven equity appreciation.
It all starts with the creation of a market and we have that. It continues with freedom to make deals and minimal restrictions that support careful, deserved liquidity. My ideas on this next time.