最新报道：This is a snippet from The Breakdown newsletter. To read the full version, subscribe. “Private markets are the new public markets.” — Matt Levine Because I was a professional trader for so long, people always asked me for investment advice. At first, I would try to explain that traders knew nothing about investing, but they would only ask me for trading advice, as if that were the same thing. (Full disclosure: traders knew very little about trading, either. It was mostly luck.) Eventually, I stopped trying to explain the difference and started giving standard advice: Put all your money in a U.S. stock index fund. For anyone young enough to tolerate volatility, this has always worked, because the S&P 500 has returned about 8.5% annually since its inception in 1928. Over a decade or two, an 8.5% annual return is great—compounding is still the eighth wonder of the world. But the vast majority of stocks don’t compound at all, which makes things difficult. A study by Hendrik Bessembinder found that just 4% of stocks accounted for all of the net returns in the U.S. stock market between 1926 and 2019. 4%! The remaining 96% of stocks had no returns overall. So an investor who missed out on Amazon (+225,089%), Nvidia (+407,612%), or Microsoft (+825,487%) is unlikely to have earned an average return of 8.5%—or anything close to that. (Bessembinder also cites Altria’s 265 million% lifetime return, but few of us have a 100-year investing lifespan, so I’m not so sure how helpful that is.) This has always been the rationale for index investing: It’s impossible to pick the few stocks that are responsible for long-term stock returns (let alone resist the urge to sell them), so it’s better to buy all the stocks through an index (and never sell them). But now, those super winners are unlikely to be in the index. The most exciting companies today—OpenAI, SpaceX, Epic Games—seem to stay private forever. That’s a problem. If we all count on our stock portfolios to get an 8.5% return each year, but the companies that make up that 8.5% are no longer among them, then who’s going to retire? One possible solution is to “make IPOs great again,” as SEC Chairman Paul Atkins told CNBC he intends to do. By reducing disclosure requirements, Atkins says, companies will be encouraged to return to the stock market. But I’m not sure why they’d want to do that—there’s so much private capital available for high-profile companies like OpenAI and Epic Games that they don’t justify having to suffer any level of disclosure (not to mention quarterly earnings calls, roadshows, litigation risk, etc.). Another possible solution is to simply let everyone invest in private companies. Last week, Republic, an investment platform regulated by the SEC and Finra, announced that it would make history by offering U.S. investors equity exposure to private companies—and it would do so within the current set of U.S. securities regulations, without any special exemptions. Apparently, Crypto makes this possible. After Republic’s KYC verification, retail investors will be able to buy tokenized versions of private shares, which (after an SEC-mandated waiting period) will be traded on-chain between whitelisted wallets. Republic is confident enough that regulators won’t object to its tokenized “mirror shares” that it’s now taking pre-orders for SpaceX, OpenAI, Epic Games, and Anthropic shares. There’s reason to be cautious: mirror shares don’t confer any ownership rights. Instead, they’re essentially a tradable IOU that can ultimately only be cashed out in an IPO or sale of the private company. The IOUs are issued by Republic, not the company itself, so buyers are subject to counterparty risk if they have the opportunity to cash out. (This afternoon, OpenAI warned that the “OpenAI tokens” offered by Robinhood to EU customers are not equity in OpenAI.) While I’d guess Republic would typically back mirror shares 1:1 with the equity they represent, it isn’t required to do so. Yet retail investors have never been known for their caution. Republic co-CEO Andrew Durgee told me this morning that it has received $300 million in mirror stock preorders. I think that reflects the severity of the problem facing public market investors right now, who rightfully feel squeezed out by the rise of the private markets. But buying OpenAI or SpaceX at a market cap of over $300 billion is unlikely to help anyone retire anytime soon. For example, Amazon, Microsoft, and Nvidia all had IPOs with market caps well under $1 billion. Even better, Microsoft’s IPO had a price-to-earnings ratio of 10, which many at the time considered expensive. It’s hard to imagine someone getting an 800,000% return from a $300 billion starting point, and who knows what the valuation would be. I imagine Republic will soon offer tokenized shares of younger, cheaper, still-private companies, perhaps the next Microsoft among them. But who will discover it? It’s easy to view the SEC’s certification rule as paternalistic, but the equity financing process it enforces is a price discovery mechanism that could make stock markets safer for retail investors. Moving that process on-chain comes with risks. Still, the shrinking number of investable public companies is a growing problem for retail investors, and investing in more private companies could be the answer. Just don’t expect an 8.5% return. Get news in your inbox. Explore Blockworks newsletters: The Breakdown: Decoding Crypto and the Markets. Daily. Empire: Crypto news and analysis to kickstart your day. Forward Guidance: The intersection of crypto, macro, and policy. 0xResearch: Get Alpha straight to your inbox. Lightspeed: All about Solana. The Drop: Apps, games, memes, and more. Supply Shock: Bitcoin, Bitcoin, Bitcoin