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Matt Levine

If You Want to Invest in Pot, Buy POT

Also blockchain drugs, exchange fees, chicken bribes and GSEs.

Here is a story about how the highly desirable Canadian stock ticker symbol POT, which was previously wasted on the Potash Corp. of Saskatchewan, will now be allocated to a new company (presumably, a cannabis company) via a lottery run by the Toronto Stock Exchange. It does seem like a bit of a failure of imagination for a stock exchange. You run a market! Sell the thing! If you’ve gotten “significant interest” in the POT ticker, as the TSX says it has, you should auction it off to the highest bidder, not raffle it off to the luckiest. Really you should run continuous two-sided markets in all ticker symbols. Why not let the potash company cash in on its ticker when it realized that pot would be buzzier than potash?

How much would you pay for POT? Of course there is a literature, though I am not sure that anyone has answered precisely this question. (It’s a paper that someone should write.) But it seems reasonably clear that ticker symbols can be valuable. Here is a paper finding that having a “likeable” or pronounceable ticker leads to a higher valuation. Here is one finding that having a ticker similar to your corporate name can lead to higher valuation. We talked last week about a 2001 paper finding that having a ticker similar to another company’s corporate name can lead to increased correlation with that company, which is desirable if it is a popular hyped company and you are not.