31–40 of 85 posts
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'very little risk' - I think standard deviation of return on S&P is something like 15%-20%...I wouldn't define a strategy with a buffer of 2.7% very little risk when the standard deviation is that high...
Variance is not risk. https://www.ncbi.nlm.nih.gov/pubmed/18554271
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I don't know more than the basics, my thought was if you pocket $2b/year and invest it, you have $13B+ in 10 years (plus your own $28b you've invested that I didn't include). So $40B to whether a storm every 10 years seems reasonable.
I think you are ignoring a lot of factors that come into play when you are managing assets on the scale of 70B$. It is easy to sink 1000$ in a minute into an index fund using Robinhood. It is not as easy when you are talking numbers on this scale.
// Oversimplified napkin math for fun, stop taking this seriously // > Around 60% of the money promised to the Vision Fund by investors other than SoftBank takes the form of debtlike securities that earn a 7% fixed return annually. They get $70B and have to pay 7% fixed annually. S&P rate of return on average is 9.7%. Softbank could pocket 2.7% of $70B ($1.89B a year) by just investing in an index. With $70B you coul…
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Is there a strong reason as to why a 9.7% annualized return on the S&P is a correct assumption we should make about the future? I feel like in the 21st century, a lot of folks have come to put a lot of faith in the "stocks in the long run" mantra. But any stationary effect in the markets can be arbitraged away. If 9.7% long-term returns were guaranteed, wouldn't everyone just borrow 30-year loans on margin at 5% inte…
I've asked this question many times in many different formats and have never gotten a satisfactory response that's grounded in fundamentals. I think it ultimately comes down to people trusting history to repeat itself.
Earlier quoted context omitted.
I don't know more than the basics, my thought was if you pocket $2b/year and invest it, you have $13B+ in 10 years (plus your own $28b you've invested that I didn't include). So $40B to whether a storm every 10 years seems reasonable.
I think you are ignoring a lot of factors that come into play when you are managing assets on the scale of 70B$. It is easy to sink 1000$ in a minute into an index fund using Robinhood. It is not as easy when you are talking numbers on this scale.
Earlier quoted context omitted.
Is there a strong reason as to why a 9.7% annualized return on the S&P is a correct assumption we should make about the future? I feel like in the 21st century, a lot of folks have come to put a lot of faith in the "stocks in the long run" mantra. But any stationary effect in the markets can be arbitraged away. If 9.7% long-term returns were guaranteed, wouldn't everyone just borrow 30-year loans on margin at 5% inte…
9.7% (or maybe 0.8%) is the average over the last 90 years and I don't think there is any other data points you could reasonably use to say it won't continue like that over a long enough time frame.
To maintain the historical growth rate, you have to believe one of the following two things, or some combination of them:
1. The US will continue to amass a larger share of the world's wealth, indefinitely.
2. The economy of the world at large will begin to also grow ~10% a year, a number far in excess of the historical average or any well-informed estimate.
Personally, I wouldn't make that bet.
Note that Masayoshi Son has the distinction of losing the most money in history when he lost approximately $70 billion during the dotcom crash. He still has a net worth of $23 billion. Win big. Lose big. https://en.wikipedia.org/wiki/Masayoshi_Son
https://arstechnica.com/information-technology/2012/10/how-s...
// Oversimplified napkin math for fun, stop taking this seriously // > Around 60% of the money promised to the Vision Fund by investors other than SoftBank takes the form of debtlike securities that earn a 7% fixed return annually. They get $70B and have to pay 7% fixed annually. S&P rate of return on average is 9.7%. Softbank could pocket 2.7% of $70B ($1.89B a year) by just investing in an index. With $70B you coul…
> Softbank could pocket 2.7% of $70B ($1.89B a year) by just investing in an index. This is totally untrue. Volatility in the short term -- one serious year down -- can sink you. No sane actor treats S&P's average rate of return as the risk-free rate.
There has been a lot of talk (and speculation) in the past regarding Softbank being 1. the avenue for Saudi Investment of their (est.) $Trillion++ as the hedge against oil's future and 2. The apac version of HSBC/DeutscheBank laundering schemes. Anyone have any speculation on the veracity of these rumors? Basically, WRT the debt risks that Softbank is taking, it suggests that they don't care about the risks, because…
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I've asked this question many times in many different formats and have never gotten a satisfactory response that's grounded in fundamentals. I think it ultimately comes down to people trusting history to repeat itself.
How would an answer based on fundamentals even look like? Nobody can predict the future.
I'm basically saying I'd like a somewhat bottoms up approach to modelling the S&P index where the inputs can explain the x% YoY increase in price.