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Opinion
Matt Levine

Private Markets Could Be More Public

Also megafunds, Libra and real-time settlement.

Here’s the way public stock markets work. If you like Apple Inc.’s stock, you can buy some. It costs $198.45 per share. Buy as many shares as you want. If Warren Buffett likes Apple’s stock, he can buy some. It costs $198.45 per share. He can buy as many shares as he wants. Probably more than you! You get the same shares. It’s the same company. Mostly you pay the same price.  He might be able to get better information than you do—like, if he called the company to ask questions, someone would call him back—but actually most of the information that either of you would want is easily available in Apple’s public financial reports and securities filings. I often make fun of the idea that public stock markets offer a “level playing field,” and of course it is true that sophisticated professional investors tend to have information and capabilities that retail hobbyist investors lack. But they are playing the same sport.

Here is a simple model for how private stock markets work. I mean, “private stock markets” is not quite the right phrase; private stocks tend not to trade frequently on “markets.” But in the U.S., there are private companies that issue stock in private placements to “ accredited investors,” mostly meaning people—roughly 16 million of them—who have more than $1 million of assets or who make more than $200,000 per year. Here is my model: