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Prediction Markets Are the New Public Markets
A limited preview of the context Palate can cite when answering questions from Trevor McFedries.
User uploadsMay 20, 2026Public source
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SPVs, HPS, OpenAI, UpsideOnly. [image: Bloomberg] com/s/c/-UkwmjIAMBevH4Vhrx6-PdCe3K6A3g-NKbul6iaogG7fcNoIJ_-3wXl_84uUofstBcOBoliYJxK84CA11BUpYfQXaqrk525UGeHaL72iJqNYhLOMtUusLrqFWf0bmWZ8FFAeFqevFhTVz4CfXTJ1fnBaJ390ZVi4jpZ28HVNbpDf7B46QxYHyUsFmhKDIbTMY8WqMvRDDZtgxPD-aNbkDQ-4eK_7rXBF6VNJVdsmAgCC19TEBpu9PGJMwBVA6LFglwgX0vxO65VYHEJa6BsCuXPbSJBN8XZra-ZzBa9o2ZSXBCfWDQXAqen_fx4W1D8RKgGCZDiRhmwW6tzwYSxyJ6guXAwGRzervmDxL7yetiRhCSM8trEsR8I6zQ/uopxj4nfoc7sqcE9eQc5LOXKPj1xbZAM/20> com/s/c/Fk687OCzsMyngI36GXwSYA4s9IOeNNn-Xhy_cyMlNglHyW5NE9mI9G7HJpCEEsQ1h79TH5teSzDb-eTkcO0KEuPb_ThWOxDlPlwi9eW04cGnVVlI9RDVs1BGRQP9GGNapkmEujKr4i1agm-x9x-khjKIFJKzcKwIwKLgZWHFud_yizo4zMXR5ucOAIvHz6vvPvyjTi3jeUXHO3o3uJYkqEpWoRAHwZYCrN3wQ_fz9BMG9U71kolcxUTqBsHLfos5zw4qUDdLpX4POoocgJuOjFV_JYcyEyx-QBkNRiENh_VoCMbZ-73ppJVCGMeBKM1BqVunNCK88W_zljzePEf_VMaMJhsF9G3il7oDedjshXh3W8fj7ZApJ77wGlVytUWz0E8g2X2J78OECa4oq4o0XHCLpRhvyjqamN3-EbfVpa1r6jELJ0mz7dLnoEFQoStt5sbw9Uh5KpWuHGu-TPvev0dgQHYnX8BUJ5Xmv64CXpq_q2gjvA9wyWEi0DSiDOBu-HxRm3Qi9XxhRJ-b0JrimprDFtZ2PGdXZhR7VQYdeihE5zAgKXZP0yDrmib-EGXk3D4GGDzDC3r1IqUWSK06ulJpmrRG81QiOsXtOeVO9MYxvpclsDQKK8RZ39Vc1zzxHV4Fgh08uf4LKD8tSyoCOpG80ZyUQE6cK5040wDzzfzqxYiz0QnV4LuyaV2ka4jXaUca-3jYi1qJukk/isarqK2V8VG71SHm6ATB8JxMCSYMOvGO/20> com/s/c/I3bAofeSk7rUxB5l5ieejAO8stklSOJwy_0sxbxJZR4LWwgBOiBC1tKbgHtV9wXmRPvuDmtDWF-ouT9zIuS6nfaL4pLnRsIUre3X2RFQgj4LRMtvsaK--Pxy3pa7pKTdF85OwIXoUegG6TGd7z41xLNLk3vr-SxwBE-tB_ofbkoywWiAzY5-QdEoSI3uW29jWL-qSQXDb7ZcK7oaAoJJfqIsVtH9dYrSO5mlla9tY53BZ00lZF0zVtxNS1FcCeRZf-FzZFNylnWfeljFJ5yUYboDJ9GEoNuaxnMMH1s4qsbU4UOvo6WYj1BnvRYXokIJmDCK74xof9Xu_Ep5bhdor9HXwnHaHXVUvMCVqqzB4DvkYP63nR4cl5q2BZtn6qAclBGgJmoGQTrsdrYsSk1O9Dr0rUCK8K08MJcBr1Be1X67aLnRHo0xYwvnrt2BeVqW2dgWeAvCWl-9-MVhoUAVb3wUd2CpNeelam5XoPQEc7T8xychIbFzguwGbyLJs_2FEE1TDNzIyNTTnmkBez-5cMz25CprGzTofvHwgeV3ERqw9MrXZw7MVDbaeju1VmAwLBTBZWKyxLRh6McZXBbA-gJuL4rhnfvhKfbd4va3XxYj4MowcobNHtibdxZU8TydXnoW_CSCxz49kp2YUWCcVTzIIJXA7dUPObjl7Z72zoUSzxxSQFuOD6DNomr4kYGCVZe0x0V9xIS6-7s/Kv3BkQ0FYZV-Ryczuwcl6LOVV9OumLDt/20> Private predictions In the 1930s, the problem with US stock markets was that investors didnât get enough information. The solution was new rules that created the US Securities and Exchange Commission and required companies to disclose various information â audited financial statements, updates on material events, etc. â if they wanted to sell stock to the general public. Companies that didnât want to raise money from the general public didnât really have to disclose anything, but the general public had most of the money, so most companies that wanted to get big had to go public and disclose the required information.
In the 2020s, the problem with US stock markets is apparently that not enough companies want to do that disclosure. âPrivate markets are the new public markets,â I often say: It is relatively easy for hot tech startups to raise lots of money from institutional investors, without ever selling to the general public, and so many of them do. They donât go public, they donât file disclosures, and they just raise money in private markets. This arguably creates two problems: 1. Hot tech startups create a lot of value, and if they donât sell shares to the general public, then the general public doesnât get any of that value.
SpaceX and OpenAI and Anthropic all have gigantic valuations; all of their growth so far has been captured by employees and founders and venture capitalists and other big investors, not by the general public. [1] <#m_5454345054624107210_footnote-1> 2. There are good social externalities in having companies be public and disclose their information. Society â journalists and politicians and activists and ordinary people â can learn important stuff by reading public-company disclosures; those disclosures are not of interest *only *to shareholders. A lot of people worry about the first problem (not so much the second) and try to think of solutions.
One set of solutions involves making it harder for companies to stay private (so they have to go public earlier and sell stock to the general public); another set of solutions involves making it easier for companies to go public. âMaking it easier for companies to go publicâ often means *reducing *the standard disclosure requirements: Itâs easier for a company to be public if it doesnât have to disclose as much about its finances. We talked yesterday com/s/c/-zkQVBnsRhqBGnZtCDj2Ou8-A1OFGMj6z1LyBwp0CFg6mgzGueIF_L4hXA4Y-kKA9q-yijukmGCFEcSYnguBA8gF7gZd--EoUvt4rYjWct8LUX13I9r-BXVGA9AkTBjwhzwWhqlqpVhIItDFzOmODyTF77eLOZJaxhKczpAFMY69M2WZYM-_0OadNiu7DFiEcC5gMj2Nx8B6wWdC4oA5ceTrizf8x6o59_uOxlk-wf1yJwPlt4jIYHQOMagcgcuN8c8eDaK1vFswA7pKkWLzexscS96hTnZwUkYU6ufeZjQqeAyaFvSJc0FzJRdvrwcrYPFWRNGD59jrN8mK6q0ZvCFA9BnqTYb__-YrLAa76yQ-14Sm73_Ss4_7AA/-8PZ-X5gIUpyvj5Wy_0dzhEWO8B9Oept/20> about an SEC proposal to make quarterly financial reporting optional: If companies could report results only every six months, that would be easier, and more of them might go public.
Today the SEC proposed some more changes com/s/c/wFynvvCqeGaaYopI5vWXmHickhnPLGfi0BaXOE-J25Ay1Sk3UVc1SUX2PIV5PcPeKz3mupGGxqjqMC18FGru2UQ3KCKf7_uJ4AENpD7s6lf-Xj-5cjuPDPZ4MASqy12jxE1TvGgPAdc-rxA2MtngVffWV9syIMpiKpOEHCPcSKBcZpkYro1vAf7iW-6Twu5eb0mVQ8Z1-wKEKVzvNdil-YcnDa0eXZZqtvtK7lcCL_UTK-1lp1EJSIy9IeCH4dWcg_U-XkfQ48SeaVPfWQR401hqn_9QaGmHaojv5lsCeLupPNHPeYCIPPD0iVcZyJ5JbQsqK92Iv7RhVDA10dXCC9mBkftOA1SM0Tgdb18gWHk87Ih9aqe-z75-BQ/tC41IF8XahTc0-WBkoU3bpMyXARjKjOr/20> to reporting rules to make being public easier and âMake IPOs Great Againâ But there is another, more radical, solution, which is to get rid of the whole disclosure regime and let the general public buy shares of private companies *without *any disclosure. Companies wouldnât have to âgo publicâ; they wouldnât have to file financial statements or disclose material events; they could just remain private. But ordinary investors could buy their shares anyway, *without *the disclosure requirements that have become standard over the last century. Nobody ever quite says this, because it sounds bad.
They just try to *do *it, by creating new ways for ordinary investors to trade private company shares freely without any disclosure. Generally the way to do it involves letting ordinary investors trade some instrument that is economically equivalent to private company stock, or at least pretty close, rather than actually trading the private stock. In recent years the standard name for this approach has been â There was a big boom in crypto, and a lot of people had a vague sense that calling something a âtokenâ made it immune from securities laws, so people went around saying âif we issue *tokens *on private companies, that will let people buy exposure to their stock without requiring any securities-law
â I wrote about this theory last year com/s/c/1U9BYPnOY01pWaplW03B4W-_vx2caJV_BpGYIiP4bajyKNX484H-ECbVvrZU-8tSDj3MxDZsC7_2cZF0GRMAOcJiQIH9Bv1pfW7LMy5QID1dz3kWvtOdiykywblEnik-MT-rEvzywP4Ge2rUTnU8vWkMzaNHEk5plY4vR72lEOIJEKbxT3ucT1f1R4xkw31wx8w0fBSWHdMKIDQCGJ1gwbzx-XxC1ehKIxn_bojV5WjP7BAV-PMYanIKX6zilwZFhXGUIQsJMYJLNikVLmFXFMJFvNuAFQRiDdn9u_Hn4pFdWxomZTJBl4zZnNLunWNl6W2mM6K18eGkgL7yj7vUMN-6UuqetXT04xVyn3FuJarihGQ40BPc70VjrQ/Usx_cZ3I4aG4-jS-OX8-NlpmdCVV_IgA/20>. It has some quite prominent proponents â Vlad Tenev of Robinhood, Larry Fink of BlackRock â who quite explicitly argue that tokenizing private-company stocks would allow ordinary investors to buy shares of private companies. âDemocratizingâ finance, this is called. But I wrote: This solution doesnât *work*, yet, in the US. You *canât *just sell âtokensâ of private-company stocks (or private credit loans, or private equity funds, etc.) to the general public, in the US, without disclosure, yet. But a lot of big players in finance are advocating for it, the regulatory environment seems pretty receptive, and you can understand why.
The general public wants to buy private investments, intermediaries want to sell them, and the disclosure rules stand in the way. Saying âwe should get rid of the disclosure rulesâ sounds bad, retrograde, greedy. Saying âtokenizationâ sounds good, modern, cool. That was last year, when âtokenizationâ sounded good and modern and cool.