They know very well that the kind of people who read these filings are not the same kind of people eagerly buying their stock at this point.
To phrase less trollishly: there aren’t a lot of good investments now, and even government bonds seem overvalued.
Walter Bagehot, the de facto founder of The Economist, was of the opinion that people will never stand 2% rates (and he meant plus :) ). They would rather fund anything, any project, the weirdest thing that offers any hope of yield; no matter how stupid.
And here we are, 143 years after Bagehot passed away. Sir, you are still absolutely correct!
While we’ll likely never run out of need for human labor, it’s very possible we’re running out of capital investment opportunities that realize a risk adjusted return above 0. “Too much money chasing too few deals” and all that jazz.
1) The world's real GDP is still going up. Or at least has been till 2019.
2) Even if it was to slow down and remove prospects of gains on capital - it still doesn't mean that people will adjust quickly; you'd have to rewrite the entire concept of pensions for starters.
3) It seems to me that core rates are seriously manipulated down (interest rates, default spreads, equity discount rates); just look at ballooning of the balance sheets of pretty much everything, or look at the share of "zombie" companies, that is companies that cannot even service their interest payments.
3 is of course just an opinion, but if true will result in serious clogging of the machine with useless actors. 3 is where, I believe, things like "bullshit jobs" / "the office" come from, for example.
We don't know which type of volatility are we going to experience, the left tail or the right tail. So far major currencies are actually strengthening (deflation) against consumer baskets, but it's early days, I think.
Maybe even neither!
In either case, I'm watching the bond yields (while they are still visible ;) ), various consumer inflation measures and most importantly gold. Gold will tell you what's going on.
he whole point of capitalism is to make capital scarce, and thus necessarily rejecting certain ideas (prospectuses), prevent them from being funded. If everything gets funded/rescued - what is the point?
Is this true? automation is essentially a emphasis from human to physical capital. It seems like we're continuing to reduce and specialize human capital while growing other forms.
Now I definitely see an end to passive capital gains in traditional financial markets; there's a lot of money sloshing around with not enough good places to put it. Anything near-passive (i.e. real estate) is also feeling similar pressures. It seems like a great time to build big projects that take a huge amount of money, I'm just not on board with pure public funding and all the issues that go with that.
Carry this a little further, and this means either the death of the concept of retirement as we know it.
> Is this true? automation is essentially a emphasis from human to physical capital. It seems like we're continuing to reduce and specialize human capital while growing other forms.
Here is really the only hope. If we can recognize one day that it's just plain not necessary for humans to labor for ~50 years between ~20 and ~70, leaving them only with their "golden years" -- the ones where serious health problems start to take the life out of life.
I don't know what to call this type of society. It certainly wouldn't be "capitalist" in any real sense. It may be "post scarcity," but not necessarily. Perhaps it will be some weird techno-socialist thing?
Think about something as simple as phone support for pretty much any product or service. There's a ton of automation being employed there to relatively little effect - just try to do anything meaningful at any company yourself and you'll find you need to be shunted to a representative.
I recently needed to switch my phone plan ownership from a personal account to a company account. There were a couple of wrinkles that made my case more complicated than normal which I can't share. Despite 4 or 5 calls, I couldn't get it done. It just didn't seem like the process for doing this type of transfer didn't exist in any codified way. I could explain what I wanted to do in plain language, but it wasn't a valid transition. Not only was it invalid, it seems like nobody at this major phone provider had ever planned for this scenario to happen.
Now imagine this scenario under full phone support automation. The system wouldn't even understand what I was trying to do. You could definitely argue that you could design some sort of scenario router that might handle a situation like this, but it seems unlikely that if they couldn't come up with a human process, I doubt they could swing an automated one.
Something like AGI could handle a problem like this, but it feels like we're dozens or maybe hundreds of years away from that.
It's quite easy to automate that outcome.
And it's true that between 1880-1900, inflation rates tended to be low or negative (the latter is NOT good for an economy, BTW), but the rest of the 19th century saw highly volatile inflation rates, ranging from -15.75% to +24.75%, if this source is to be believed. Not great for long term investment.
That sounds very much like a description of the modern VC ecosystem.
Yes, and a bankrupt pile of garbage is not one of them, as any even half-sophisticated investor would tell you. You don't need to be up to your neck in 30-years to know buying a bankrupt company is a bad investment.
This is honestly not something I thought I'd ever have to type out in words on a forum full of tech folks.
Sure, you may get lucky, but the odds are unfavorable all along.
Because the odds on Hertz may actually be better than the odds in a Vegas casino and these people play that anyway?
Gambling odds are never in your favor--the house always wins.
Gamblers are always going into a situation where they are going to lose. The only difference with the Hertz situation is that if you can offload your stock to the next sucker before it tanks out, you "win".
That's pretty good odds for a gambler, actually.
The alternative I was thinking of was not a Vegas casino, but some other stock, or a derivative thereof.
The only way you're going to make any money -- at least in real terms -- on government bonds is if interest rates go even more insanely low so you can dump them on another superoptimistic person.
Similarly, those who plan to buy the "IBO" shares are probably expecting to profit when some good news comes up and bumps up the price long enough to sell.
They're both built on the assumption of being able to dump the security on another sucker.
Nobody is buying government bonds to beat inflation, nobody cares about the coupon payments. They are trading them on 10x leverage, its the price of the bonds that matter.
You can get 10x leverage on straight up 30 year bonds, and you can do way more in the bond futures market.
All you are doing is frontrunning the central bank. or going short. or trading options on bond futures.
and that's just US treasuries. other country's government bonds are interesting, and then the rest of the yield curve is full of fun quirks too.
The credit markets are actually pretty wild.
If someone offers you millions of dollars for your totaled car you’d be a fool not to take it, this is no different. Hertz management must be loving this.
there's at least a 1/2 dozen instances of "because we are in bankruptcy protection <potential bad thing>"