So Exchange Traded Index funds and the $1.2 trillion invested in them have increased volatility for small cap stocks making the whole IPO process less attractive for many founders of U. S. tech companies — our kind of companies. It’s not the end of the world but has been a downer of sorts for both the market and the tech industry for the last decade. What’s to be done about it, then?
“The problem as we see it could be 80-90 percent contained if only Exchange Traded Funds were subject to the same sort of trading circuit breakers that were imposed by the SEC on regular shares after the Flash Crash of earlier this year,” says […]
I write a lot about technologies, companies and industries, some about economics, but hardly ever about stocks or trading, so this column is an unusual one. But because of the hard work of a couple economist friends of mine I’m finally coming to understand a stock market phenomenon that has been hurting tech startups for over a decade — Exchange Traded Funds. Forget about bad banks, cooked books and even the recession: Exchange Traded Funds are forcing more and more good tech companies to abandon the idea of ever going public.
We’re well into our Startup Tour, visiting young companies so far in New York, Vermont, Pennsylvania, Michigan, Illinois, and Missouri. Today we head to Kansas City and the Kauffman Foundation, one of our sponsors. That I’ve been slow to post the promised tour videos or write about these companies comes down to air conditioning failure, driving 4,000 miles, air conditioning failure (again), swiping a tree and tearing-off our retractable steps, air conditioning failure (yet again), and hitting a pothole so deep that our exhaust system literally fell off in the road.
