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Something big this way comes?

PostPosted: Fri Jan 22, 2016 5:51 am
by Zack Morris
An interesting analysis of why corporations today hoard so much cash -- and why investors agree that they should: Why Are Corporations Hoarding Trillions?

Spoiler:

Surely the most important economic question of our time is a fairly simple one: Are the good times over? Will wages continue to fall for many, while rising high for a few? In the cash conundrum, we might find a modest reason for optimism. If corporate leaders and their investors truly believed that the future were bleak, that innovation and economic growth were irreparably slowing, there would be little reason to hold on to all that cash. Their hoarding of it hints that they think the next transformative innovation could be just around the corner. If in fact they do — and if they’re right — it’s good news for all of us.


We are speeding toward veritable icebergs of cash!

Re: Something big this way comes?

PostPosted: Fri Jan 22, 2016 12:42 pm
by Simple Minded
In the olden days, the common wisdom was to use good times to accumulate capital, and use bad time to buy assets at a discount.

That and saving for a rainy day, or making hay while the sun shines were "normal."

Last 15 years or so, eating your seed corn seems the norm.

Re: Something big this way comes?

PostPosted: Sat Jan 23, 2016 3:33 pm
by Zack Morris
How so? At least according to leading-edge capitalist theory, companies today are much better managed than the sprawling old-day conglomerates of old. Far from eating their seed corn, they've largely accumulated cash stockpiles during the recent bull market. The picture is complicated by QE, which made it possible to obtain cheap financing for acquisitions, so we saw a wave of M&A activity in 2015 and the year before, in some industries like pharma and tech. But there is still room to deploy capital, though, especially if assets get cheaper in a bear market.

A lot of interesting stuff on the horizon that pessimists (including some on this forum) would dismiss as fads only a few years ago. Now, they're starting to sound like Krugman and his famous comparison of the Internet's impact to fax machines. Few -- and I certainly did not -- saw the brilliant, value-creating engine that is Facebook. Now, we have witnessed a sea-change in artificial intelligence capability, self-driving cars are just around the corner, CRISPR is revolutionizing biology, VR is arriving, and former high-tech innovators like Intel are now in a once-unthinkable permanent decline as a new paradigm sets in.

There is so much wealth yet to be created that it boggles the mind. It's an interesting perspective shift: that perhaps the conventional wisdom that corporations are hoarding cash only because they can't find anything useful to invest is 180 degrees from the real truth.

Re: Something big this way comes?

PostPosted: Mon Feb 01, 2016 10:57 am
by Mr. Perfect
I guess this is your first bubble.

Re: Something big this way comes?

PostPosted: Tue Feb 02, 2016 9:30 am
by noddy
Simple Minded wrote:In the olden days, the common wisdom was to use good times to accumulate capital, and use bad time to buy assets at a discount.

That and saving for a rainy day, or making hay while the sun shines were "normal."

Last 15 years or so, eating your seed corn seems the norm.


you are describing depression conditions, people not optimistic for the endless growth of the future, cynical about the safety nets provided by the system and generally paranoid that their jobs might not be there tommorow.

bugurk

they will wish they had of malt mashed the corn instead of eating it - same outcome but a more pleasant path to get there.

Re: Something big this way comes?

PostPosted: Wed Feb 03, 2016 1:34 pm
by Simple Minded
noddy wrote:
Simple Minded wrote:In the olden days, the common wisdom was to use good times to accumulate capital, and use bad time to buy assets at a discount.

That and saving for a rainy day, or making hay while the sun shines were "normal."

Last 15 years or so, eating your seed corn seems the norm.


you are describing depression conditions, people not optimistic for the endless growth of the future, cynical about the safety nets provided by the system and generally paranoid that their jobs might not be there tommorow.


Maybe, or just describing farmers, or anyone raised in the era where it was implicitly understood that there are few guarantees in life. That both nature and life can be unpredictable, that you will not always get sunshine, rain, daylight, warm temps, good crops, or health when you need them.

Why so many people think otherwise is somewhat of a mystery. Separation from nature?

noddy wrote:bugurk


What is bugurk?

Re: Something big this way comes?

PostPosted: Wed Feb 03, 2016 1:53 pm
by noddy
Simple Minded wrote:
What is bugurk?


the noise a chicken makes.

buk-buk-bugurk

Re: Something big this way comes?

PostPosted: Wed Feb 03, 2016 2:04 pm
by Simple Minded
noddy wrote:
Simple Minded wrote:
What is bugurk?


the noise a chicken makes.

buk-buk-bugurk


People are chickens? That would answer my question. Once again, you are god-like in my eyes! :D

Re: Something big this way comes?

PostPosted: Thu Feb 04, 2016 8:36 am
by noddy
Simple Minded wrote:
noddy wrote:
Simple Minded wrote:
What is bugurk?


the noise a chicken makes.

buk-buk-bugurk


People are chickens? That would answer my question. Once again, you are god-like in my eyes! :D


i actually intended that i am a chicken, scratching my way through human politics and crapping randomly on whatever happens to be behind me.

Re: Something big this way comes?

PostPosted: Fri Feb 05, 2016 2:52 pm
by Simple Minded
noddy wrote:
i actually intended that i am a chicken, scratching my way through human politics and crapping randomly on whatever happens to be behind me.


You're still one of the better chick-men I have ever imagined. ;)

keep scratching Bro! :)

Re: Something big this way comes?

PostPosted: Sat Feb 06, 2016 1:30 am
by Zack Morris
Mr. Perfect wrote:I guess this is your first bubble.


Says the guy stockpiling for the apocalypse, which he believes said bubble will trigger.

Re: Something big this way comes?

PostPosted: Tue Mar 15, 2016 8:49 am
by Mr. Perfect
Right. This isn't my first bubble. It'll probably be the last though, for everyone.

Re: Something big this way comes?

PostPosted: Wed Mar 16, 2016 1:09 am
by Zack Morris
It's probably not your first Apocalypse either, and maybe not even the last.