Never said it was the only part. My point was that when credit dries up, jobs are lost.... i.e., supply causing problems.
Lots of reasons for why credit can dry up, but the idea that jobs are only a function of demand is ludicrous.
138 karma · joined April 7, 2013
Lots of reasons for why credit can dry up, but the idea that jobs are only a function of demand is ludicrous.
1) Saving in itself does not create jobs, but savers allow for jobs to be created.
2) Not my fundamental statement at all.. My point was that the supply of credit (significantly shrunk due to reasons beyond a few paragraphs) can kill jobs.
What is popularly perceived to be wealth hoarding (people worth millions/billions) are really doing no such thing. Virtually all of that wealth is invested in one way or another. Stocks, bonds and even savings accounts result in economic value being moved to those who can use it most effectively (i.e., VCs, cities building bridges, companies expanding, etc.).
Some thoughts: -Billionaires primary derive their net worth from stock, which is difficult for them to sell. Paper gains, don't represent increases in cash flow. Sources of cash flow would include dividends and planned stock sales. Given the general plunge in dividend yields (4-5% pre-crisis, ~2% today) it's not hard to imagine that even billionaires have less cash at their disposal. Furthermore, given the market plunge and uncertainty the last few years, it would be hard for owners of major public companies to sell large quantities of their shares without signalling to the markets that they believe their companies are overvalued.
-Tax rates and deductions have changed. Shouldn't be a surprise that given the dramatic increase in marginal tax rates and the new limits on deductions that there would be an impact.
-Perhaps there are exogenous factors at play... maybe after a rush of great new non-profit ideas earlier in the decade, billionaires are seeing fewer ideas that excite them enough to donate significantly despite the obstacles mentioned above.
Article just strikes me as wealth bashing without even attempting to get into the more interesting part of the story.
All savers, even if they aren't founders/owners of companies themselves, create jobs by keeping their money in the financial system. Whether by owning stocks, bonds, private equity funds, or savings accounts, the resources are allocated to where they are needed most. When that whole system dries up, you get a credit crisis.
Obviously, yes, demand is important. Confidence crises can wreak havoc.. but simply saying demand is the only thing that's important is ludicrous when dealing with such a complex and dynamic system.
Look, not saying they can't do it.. just saying as an investor, I'd wouldn't support it. Money is after-all fungible. It doesn't matter if sales are paying for 100% of the salaries or not... if there's money being left on the table that can be reinvested into the company by either bringing in new/better talent or retaining your top talent, I would be angry. The founders already have high incentive to stay as long as they can satisfy basic needs on their salary. Employees with little equity do not unless they are paid competitively.
I know few rigorous investors that would stand to pay their CEO/founders more than ~80k a year, at least until it's clear the company is maturing. Also, as a founder with significant equity, I'd much rather put as much of my salary that I can spare (My wife and I need to eat, pay rent, etc.) to go towards bringing in (and keeping) top sales or technical talent. If you believe in my company, the math works out very well.
I also do the occasional angel investment, and frankly, I'd be pissed to see a business I invested in run like this. Two annual international offsite trips? What?! You're building an app to schedule tweets. This is not rocket science. Get to work!
Additionally, when I've had issues, they've typically been handled promptly and thoroughly.
All that said, the product is fantastic. Have been using it for a year on an almost daily basis.
Additionally, the author made a good point in that many investors are not buying straight common shares. You can't simply value those shares by doing a DCF. You need to value each component of the instrument (an option, equity, debt,etc.) to get to a final number. He's right that extrapolating out that number is incorrect, but it's also incorrect to then deduce that anything beyond DCF is 'fudged'.
http://blogs.wsj.com/digits/2013/11/13/snapchat-spurned-3-bi...
>> This makes its estimation implicitly data-starved, because with a DCF at leat you are getting a time series of independent measurements.
It isn't a data-starved number. It is often as simple as DCF calculation of value - the book value. DCF isn't used to calculate book value. Book value is simply the sum of the tangible parts.
There are many ways of attempting to value a company, including looking at the discounted (and estimated) future cash flows, but they do not tell the full story.
For example, as an avid skier, I might be willing to pay $1000 for a better pair of skis as I will get more out of the ski. A beginner skier would see no increase in utility in my skis over a $200 pair. So, what's the value of the expensive pair of skis? Well, to me it's at least $1000. To the beginner, it's no more than $200.
The same holds true for companies. DCFs and multiples are useful hints at understanding the value of a company, but ultimately, they are insufficient. Companies can see strategic value in acquisitions differently, including the value of shutting it down (either because of concerns of competition or to acqui-hire the team).
On the public market, shares will more closely represent a discounted cash flow view of the future, but not always. The author's point about different share classes is also valid on public markets where control does not always go to common shareholders. That said, it's extremely hard to fool the market, as you've suggested. There's a ton of data to confirm that the market is exceptionally good at pricing the value (probability weighted against tons of factors) of future cash flows based on all current market information. There is a ton of data to support this, and very little to dispel it.
Even in a steady-state in which Snapchat is earning serious money, were it to be acquired, the acquirer would likely need to account for it predominantly through goodwill. What tangible assets does snapchat have? Data center/infrastructure is likely the only area where a company like snapchat could invest in a way that would increase its book value... but snapchat is more likely to stay on the cloud...
The typical tech startup has few tangible assets, hence the necessity to account through book value.
His argument and the degree to which he was wrong are among the clearest examples of the power of capitalism in overcoming seemingly impossible barriers.
Largely, though, I agree that DN isn't really necessary/useful but for a small niche... but when you need it, it's EXTREMELY necessary.
Must have been on the moon!
Here's an alternative story... the 5 'civilians' he was with were his father's old AQ friends.
Comparing these two cases is a joke.
Also, minimum wage is a terrible measure to use here. Look at median wages, or even look at the upper end of the bottom quintile. Less than 3% of the country's workforce earns at or below minimum wage. [http://www.bls.gov/cps/minwage2012.htm]
If he really things this is what's going to keep him safe, he's over playing his hand.
Furthermore, I think he's deluding himself if he thinks he's actually going to be targeted for assassination by the US. I'm no Obama fan, but it's a little far fetched. Shoved in jail, maybe. Killed to silence him? Nah.. that's a strategy ironically more likely to be employed by the countries he's seeking asylum status from.
I think perhaps my comment was misunderstood. My point was more broadly that democracy and the region are not compatible. For the majority of the last century Turkey was always the exception (albeit a weak one as the military was responsible for keeping secularism alive) to this incompatibility. But seemingly, even in turkey, that illusion has fallen apart. No one is more sad about this than I am.
Calling these protests democratic is incorrect. Instead they point to a larger problem: that majorities of these countries support hard-line Islamist governments. The protesters are merely a reflection that fundamentalists (perhaps of any religion) are incompatible with a free and secular society.
Or just let people decide what's worth buying for themselves. If they decide they'll get utility out of it, great. If not, then they don't have to buy it. No need to foist your desires on others.
Law enforcement has been using airplanes and helicopters for decades for various purposes. What is so odious about unmanned versions of the same thing? As long as the missions are lawful, not sure why this is any different.