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SoftBank’s debt obsession

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Re: SoftBank’s debt obsession

#61

Post by brownbat »

ericjang wrote: post #12
soared wrote: post #7

// 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…

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…

Investing in 1968, your S&P holdings would take until 1992 to regain their inflation adjusted starting value.

The S&P has not always generated positive returns relative to inflation.

Sometimes there are 30 year long dips.

Re: SoftBank’s debt obsession

#62

Post by teslaberry »

the japanese have an absolutely horrible track record of investing in overpriced risky foreign investments in the west.

the chinese are not repeating the japanese mistake in the same way, bit in a different one...

Re: SoftBank’s debt obsession

#64

Post by jbhatab »

samstave wrote: post #15

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…

I'd like to learn more about this and their motives. It'd be a little alarming if the US government was the top investor in the top vc firm buying up massive stakes of top SV companies. But maybe im unaware of how much investments America and other countries make like this.

Re: SoftBank’s debt obsession

#65

Post by sonnyblarney »

baybal2 wrote: post #28

Plainly and simple: Vision Fund is a giant LBO scheme for Saudi money. Any other interpretation does not make any sense financially. Vision fund is knee deep in SHORT TERM debt – thus, they have to make money fast. They look for stuff they can flip quickly, and "Pets.com style" companies are ideal targets for that.

To be fair, the Saudis have so much money it's hard to place, and therefore have to accept riskier terms. So maybe this is realistically the best they could do. And so Softbank can get away with better terms.

Re: SoftBank’s debt obsession

#66

Post by verbify »

soVeryTired wrote: post #55
User23 wrote: post #22

Earlier quoted context omitted.

Pretty close actually. https://www.nerdwallet.com/blog/investing/average-stock-mark... Edit: Anyone want to clue me in on what the downvotes are for here?

The Nikkei 225 is still down from 20 years ago. Its fate is a very plausible alternative history for the S&P.

Taking into account reinvested dividends, it's given an annualised return of 3.5% in the past 20 years. Source:

https://dqydj.com/nikkei-return-calculator-dividend-reinvest...

Re: SoftBank’s debt obsession

#67

Post by verbify »

sonnyblarney wrote: post #65
baybal2 wrote: post #28

Plainly and simple: Vision Fund is a giant LBO scheme for Saudi money. Any other interpretation does not make any sense financially. Vision fund is knee deep in SHORT TERM debt – thus, they have to make money fast. They look for stuff they can flip quickly, and "Pets.com style" companies are ideal targets for that.

To be fair, the Saudis have so much money it's hard to place, and therefore have to accept riskier terms. So maybe this is realistically the best they could do. And so Softbank can get away with better terms.

I've never understood that argument. Can't they just sink more money into the stock market?

Re: SoftBank’s debt obsession

#68

Post by baybal2 »

verbify wrote: post #67
sonnyblarney wrote: post #65

Earlier quoted context omitted.

To be fair, the Saudis have so much money it's hard to place, and therefore have to accept riskier terms. So maybe this is realistically the best they could do. And so Softbank can get away with better terms.

I've never understood that argument. Can't they just sink more money into the stock market?

They want it on better terms, and have access to companies not on stock markets including all those pets.coms

Re: SoftBank’s debt obsession

#69

Post by estsauver »

neuromancer2701 wrote: post #35
DSingularity wrote: post #30

Earlier quoted context omitted.

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.

99% in SPY, 1% in 80% SPY Put option should cover your downside.

I think you're going to find the 80% SPY Put option doesn't have liquidity for 700 million$ of options.

Re: SoftBank’s debt obsession

#70

Post by sonnyblarney »

verbify wrote: post #67
sonnyblarney wrote: post #65

Earlier quoted context omitted.

To be fair, the Saudis have so much money it's hard to place, and therefore have to accept riskier terms. So maybe this is realistically the best they could do. And so Softbank can get away with better terms.

I've never understood that argument. Can't they just sink more money into the stock market?

Supply and Demand. More demand is better terms for stock sellers, i.e. companies. And their investing would probably completely skew the market. So it's hard. Investing directly might put them at risk of some kind of oversight as well.

And they already have a lot tied up in those kinds of investments anyhow. They own a lot of real estate around the world as well.

It's hard to find places to park that amount of money esp. if there are political considerations. Nobody is worried about taking money from the Norwegians ...

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