rat_1234

This is my number one argument against HOAs: They are fundamentally un-American. Truly in every sense they are for collectivism over individual rights and it's insane.

I live in a neighborhood where if you want to cut down a tree more than 10" in diameter you have to get all of your neighbors' buy-in. It's my tree! And your trees are your trees!

Say what you will about whether or not a private company like Paypal should have the ability to do this.

What clearly is true based on this example is that if we ever gave this power to the government they would use it and use it in a dangerous way.

There are two games that come to mind that are/were like this:

1) Total War series — it's not FPS per se but there is the idea of managing the macro situation (resources, where armies are, developing cities, etc.) and then when you actually attack another army or lay seige, you have more of a tactical view where you direct the action.

2) The original Rainbow Six (and maybe some of its immediate sequels). You would plan out exactly what you want every one of your special ops guys to do (e.g., when I give the signal throw a flashbang into this room) and then you get to play as one of them. Not sure if anyone has replicated this yet!

Keeping your fixed costs meaningfully less than your non-variable compensation (i.e., RSUs) is the root of everything he said here. It's that simple.

I wonder how many bankruptcies could be avoided if more people just had some basic spreadsheet literacy.

Before I bought a house, I built a stupid simple model to understand what my monthly expenses would look like. What you get an appreciation for is that very quickly you can go from comfortable to precarious with just a few additional fixed expenses (childcare, a new car, a boat).

Without laying it all out and seeing how your numbers change, it's hard to get a visceral appreciation for your finances.

I wrote a CLI tool in Python for this exact use case and am currently using it to write a novel. Basically the CLI tool solves a lot of the tedious issues that come up (e.g., combining all of the text files, reordering them, etc.)

If you like writing out of a text editor (I use Atom) it's super useful.

https://github.com/edelgm6/draft

This calls to mind a quote from Cormac McCarthy's Blood Meridian:

  It makes no difference what men think of war, said the judge. 
  War endures. As well ask men what they think of stone. War 
  was always here. Before man was, war waited for him. The 
  ultimate trade awaiting its ultimate practitioner. That is 
  the way it was and will be. That way and not some other way.

Just swap our war for Excel! "It makes no difference what men think of Excel, said the judge. Excel endures. As well ask men what they think of stone."

Well, the thing is that they cap the size of the fund at $10B so it's not really a CAGR per se as the original capital isn't appreciating at that rate.

It's just they have $10B invested and then they distribute $6.6B per year and that's it (i.e., the fund doesn't become $16.6B next year).

Still take your point that it's an insane figure!

Agreed!

It's easy to say 'you should be investing that capital into projects.'

But I think people don't realize how much money is actually generated by some of these companies.

I know AAPL is the strongest possible case for my argument, but bear with me.

Their operating cash flow net of CAPEX is ~$65B as of their 2018 year ending in September. I.e., after paying for all of the investments they want to make, they still have $65B in straight up cash left over.

I mean -- what are you supposed to do with all of that?

Oh well sure I do as well. All they have to do is be less expensive than what Uber can deliver enough to get people over any concerns with technology and they're good.

My point is really that Waymo is eliminating what is unquestionably the highest marginal cost component of a ride.

I totally believe it.

If you've ever taken a taxi in a market like South Africa, China, or Chile, it's so cheap it's insane. Almost unbelievable.

In many cases the cars are more or less the same, the gas costs more or less the same, so the only variable that's different is the cost of labor which Waymo eliminates.

Another good one (though a bit dated now) is Great Plains by Ian Frazier.

https://www.amazon.com/Great-Plains-Ian-Frazier/dp/031227850...

The share of the wealth creation in Silicon Valley that has been captured by property owners is outrageous.

Unlike Ray Dalio, when Bill Gates talks about something like books it never feels like he's trying to impress anyone.

It's "here are some books I really like and maybe you would too" versus "I am a genius, if you enjoy these books you might be a genius too."

To be fair, no I wasn't working in managerial accounting in the 1980s.

Maybe what would help is if you could explain what metric a reasonable manager would measure that would get worse under JIT versus better.

I guess maybe if your assets go down you could look more highly levered, but financial leverage isn't really something that a manager can affect anyway (more of a CFO level metric).

All of the asset-oriented measures I can think of -- like asset turnover, working capital as % of sales, working capital as % of assets, WIP inventory as a % of total inventory, etc. -- would all improve.

"However, accounting systems count inventory as an asset, so and any significant reduction in inventory had a negative impact on the balance sheet...successful JIT efforts tended to make senior managers look bad"

This shows a poor understanding of managerial accounting.

High "working capital" requirements, of which inventory is a big part, are a huge drain on free cash flow. Any company that sees its inventory as a % of assets go DOWN would view it as a positive by both its management and investors.

Fair point!

I think a way to look at it is what earnings multiples companies trade at signals to companies how much money they can raise in an IPO or follow on equity issues.

For example, if Boeing is trading at 5X EBITDA then it signals to other aerospace and defense companies that they can expect to raise capital at a similar multiple.

It's indirect, but it still provides a service: creating a predictable, liquid securities market which firms can use to raise capital.

Ok yes that's definitely a fair point. To be clear I like the idea of the tax code being simpler and rates lower since it unlocks more NPV positive projects by removing an important cost.

But I do think that's a different argument by a few degrees than the idea that capital gains taxes should be lower to somehow compensate investors for their risk.

I've heard the former but I have never heard the latter unless it's been one of my friends in PE trying to justify it.

It's the investor's job to make sure their investments are producing an adequate risk-adjusted return, not the government's job to help you get there.

Or correctly price it.

Congestion isn't a capacity problem, it's a pricing problem. EDIT: Given the amount of infrastructure we already have that is.

Your first example is very old school thinking. When a company 'craters' it's not like everyone gets off scott free. All of the people holding the debt, usually big, savvy banks, with the senior tranches of debt have gotten wise to this sort of behavior. And when I say they've gotten wise to it, I mean they got wise to it 20 years ago. In short, if you want to load it up with debt that the company will never pay back and give yourself a big dividend you first have to find someone to lend you that money. If it's obvious to you that that's a bad idea it's obvious to the banks as well.

Most exits in PE are either going public (in which case you have to convince the equity markets that the company is stable), selling to a strategic buyer (e.g., if Apple were to buy RAX from Apollo), or even selling to another PE firm which happens all of the time.

The point is that neither of these scenarios turn out well if you are levering a company up to an unsustainable capital structure.