Apple Is the New Pimco • Hacker News Board

Re: Apple Is the New Pimco

#71

Post by larrys » Fri, Jun 05, 2015, 11:41 PM UTC

anigbrowl wrote: post #69

larrys wrote: post #64

Earlier quoted context omitted.

Oh wow I could write a book in response to that type of question. "if you were the seller in that transaction, is the opportunity cost of waiting a bigger worry than getting the best price?" If I understand what you are asking about the downside risk of not taking an offer on the table? That is always a consideration in any transaction where you are selling whether it be real estate or another asset. And it depends o…

Oh wow I could write a book in response to that type of question. You should! I find this kind of advice incredibly invaluable. My parents were civil servants so this sort of risk calculus is quite alien to me, and in the first few years of my working life, using my initiative to get something done frequently resulted in disciplinary action - perhaps by chance with the jobs I was in, perhaps the UK/Irish business/emp…

A very well know VC asked me to write a blog post a few years ago on the subject. I compiled 7 pages of notes. And could have done on forever. These were just bullet points.

I then started to strategize that I would negotiate with the VC who made the request saying that I needed to be able to do 3 blog posts over time not just one. Then maybe I would ask for another two. You know, to get maximum exposure.

Then I realized that there would simply be to many forks to consider and that there are simply to many "what if's" and dependencies. And maybe people would actually be dangerous with a little knowledge. And then I might even deprecate my own advantage since people always underestimate me it is part of the routine in a way.

I make decisions based on what I see at a particular point in time and that is always changing. So to try and give all of the possibilities and things that I think about is really really hard. And my reactions are immediate I don't even really have to think that much to come up with them.

I am sure there are other analogies and it's the same reason that you can't just read a book on playing cards (I don't play cards so I may be off on this one). It's a touch and feel and experience thing that guides what I do.

Years ago I was on the phone with someone and raised a price by 50% just when I heard the particular tone in the voice in the first 2 seconds. How can you do that if you don't know what it is I am hearing that made me do that? And what if there are 500 signals that I am interpreting at the same time?

Not that I couldn't say valuable things of course or that it wouldn't be fun!

By the way I can always tell when someone has read a book on negotiation or tries to come across as a "negotiator". And that is even though I've never touched a book myself on the subject (I don't want to mess with my thinking). I can just spot it by speech pattern or the things that they suggest or the way that they operate.

Re: Apple Is the New Pimco

#72

Post by larrys » Fri, Jun 05, 2015, 11:46 PM UTC

anigbrowl wrote: post #69

larrys wrote: post #64

Earlier quoted context omitted.

Oh wow I could write a book in response to that type of question. "if you were the seller in that transaction, is the opportunity cost of waiting a bigger worry than getting the best price?" If I understand what you are asking about the downside risk of not taking an offer on the table? That is always a consideration in any transaction where you are selling whether it be real estate or another asset. And it depends o…

Oh wow I could write a book in response to that type of question. You should! I find this kind of advice incredibly invaluable. My parents were civil servants so this sort of risk calculus is quite alien to me, and in the first few years of my working life, using my initiative to get something done frequently resulted in disciplinary action - perhaps by chance with the jobs I was in, perhaps the UK/Irish business/emp…

"My parents were civil servants"

My dad was in small business. I picked this type of thing up when I was old enough to understand what he was saying. He used to play guessing games of "why did I do this" that could last hours until I had thought of the reasons why he did what he did. I had to come up with all of the reasons why he did something.

Importantly as a small business person he only had to answer to his customers and I guess employees. Plus he could gauge the risk in the chances that he would take and make decisions on the fly w/o being second guessed by anyone or told that he was wrong.

That freedom is really really important because if you don't have that it will restrict the creative juices quite a bit.

Re: Apple Is the New Pimco

#73

Post by mahyarm » Fri, Jun 05, 2015, 11:58 PM UTC

tanderson92 wrote: post #53

mahyarm wrote: post #35

Earlier quoted context omitted.

The USA is _VERY_ unique in the world this way. Every other citizen of the world has the freedom to move away and stop paying taxes to their home country if they make no income from it.

That hardly is an excuse for US corporations to avoid tax obligations. Rather it shows the two standards of treatment of the US towards real people and corporation "people".

Think of multinational corporations as multinational families, each one with their own singular citizenship. It makes no sense to tax the family members of other countries until they send money to the family member in your country.

If the other family members decided it was a bad idea to send you money to your country because it will be taxed to death, can you blame them?

Re: Apple Is the New Pimco

#74

Post by tanderson92 » Sat, Jun 06, 2015, 12:04 AM UTC

mahyarm wrote: post #73

tanderson92 wrote: post #53

Earlier quoted context omitted.

That hardly is an excuse for US corporations to avoid tax obligations. Rather it shows the two standards of treatment of the US towards real people and corporation "people".

Think of multinational corporations as multinational families, each one with their own singular citizenship. It makes no sense to tax the family members of other countries until they send money to the family member in your country. If the other family members decided it was a bad idea to send you money to your country because it will be taxed to death, can you blame them?

>Think of multinational corporations as multinational families, each one with their own singular citizenship.

Why should I? Of course this is not actually what they are, or at least what they claim to be. That is, since money is fungible in a global economy they can in effect use untaxed funds to influence U.S. political campaigns while they claim they are a single person deserving of the same rights afforded by the constitution.

U.S. persons cannot do that. This is what I mean by the double standard.

Re: Apple Is the New Pimco

#75

Post by IkmoIkmo » Sat, Jun 06, 2015, 12:31 AM UTC

return0 wrote: post #44

charlesdm wrote: post #38

Earlier quoted context omitted.

Only an American could have written this answer. All other countries in the world use a non global taxation system. Two basic scenarios: 1. US entity owns a company in the UK. UK company earns $100, pays 20% tax on that, and is left with $80. Declares a dividend to the US parent, and the US then taxes the difference (35% US tax rate - 20% UK tax rate = another 15% to pay). We're left with $65 2. UK entity owns a comp…

It looks like the real issue is the high corporate tax rate in the US then. Are there not double-taxation treaties to avoid overtaxing otherwise? On the other hand, the scenario of a UK company owning a company in a tax-free zone in dubai and thus paying 0% taxes anywhere doesn't sound fair either.

Double tax treaties are pretty common, it depends on the good and the corridor so I don't really know what it's like for Apple. Still, the fact they mention tax as a reason to keep cash offshore probably means the treaties are non-existent or limited at best.

Re: Apple Is the New Pimco

#76

Post by hkmurakami » Sat, Jun 06, 2015, 12:34 AM UTC

I honestly don't understand how this is news. Companies have been doing this for ages; MSFT's operations are bests in class, returning over 2% on their cash equivalents while being under tight restrictions for risk tolerances.

Re: Apple Is the New Pimco

#77

Post by charlesdm » Sat, Jun 06, 2015, 12:35 AM UTC

return0 wrote: post #44

charlesdm wrote: post #38

Earlier quoted context omitted.

Only an American could have written this answer. All other countries in the world use a non global taxation system. Two basic scenarios: 1. US entity owns a company in the UK. UK company earns $100, pays 20% tax on that, and is left with $80. Declares a dividend to the US parent, and the US then taxes the difference (35% US tax rate - 20% UK tax rate = another 15% to pay). We're left with $65 2. UK entity owns a comp…

It looks like the real issue is the high corporate tax rate in the US then. Are there not double-taxation treaties to avoid overtaxing otherwise? On the other hand, the scenario of a UK company owning a company in a tax-free zone in dubai and thus paying 0% taxes anywhere doesn't sound fair either.

Well, the second part of this equation is that they are able to funnel a ton of cash to low tax companies (via loans/royalties/other loopholes). So maybe they've only paid 1-5% on the entire amount.

Repatriation of those funds would essentially mean paying close to 35% tax (+ state taxes). DTTs don't fix that, they just make sure you don't pay the same amount twice. I.e. the 20% in the UK AND 35% in the US.

Add to that fact that Apple can pretty much borrow unlimited funds in the market (debt != income, you don't pay tax when you borrow) to fund share buybacks and dividends. Why repatriate? Financially it just does not make sense, since you'd lose so much of your equity. It's better to invest it abroad.

Re Dubai: If an entity is a conduit company, then maybe not. But if you're operating a business or selling stuff there, then I think it is. No income tax is more of an anomaly these days, and a way for countries to attract new business.

Re: Apple Is the New Pimco

#78

Post by [deleted] » Sat, Jun 06, 2015, 12:35 AM UTC

forrestthewoods wrote: post #47

anigbrowl wrote: post #39

Earlier quoted context omitted.

Not to be critical of your business practice, but the broker's behavior seems to be on thin ethical ice here, since he had a fiduciary obligation to the client - his intentions may have been ethical but but he comes off as a little lazy/irresponsible for not getting the best price for his client. As you're obviously investing in real estate yourself, how do you balance the benefits of liquidity from a quick sale vs.…

No real estate broker gets the absolute best possible deal for a client. They get a small percentage of any deal. A slightly better deal might be worth thousands of dollars to the client but only a few hundred to the broker. It's not worth the broker's time to spend a full week looking for the absolute highest buyer. It's in the broker's interest to process more deals more quickly than to squeeze that last little bit…

[deleted]

Re: Apple Is the New Pimco

#79

Post by jkestner » Sat, Jun 06, 2015, 12:38 AM UTC

larrys wrote: post #66

forrestthewoods wrote: post #47

Earlier quoted context omitted.

No real estate broker gets the absolute best possible deal for a client. They get a small percentage of any deal. A slightly better deal might be worth thousands of dollars to the client but only a few hundred to the broker. It's not worth the broker's time to spend a full week looking for the absolute highest buyer. It's in the broker's interest to process more deals more quickly than to squeeze that last little bit…

Generally you are right. However I am paid to negotiate and buy things for people (not real estate). I have even had people tell me that they will pay me more if I can get them a better deal. I tell them that they don't have to do that. That I charge a fixed fee. [1] (And the fixed fee varies btw.) The truth is I get them a good deal because (as I mentioned in my other comment) this is a game for me that is fun and t…

The book you're thinking of is Freakonomics. The video version: https://www.youtube.com/watch?v=17jO_w6f8Ck

Re: Apple Is the New Pimco

#80

Post by IkmoIkmo » Sat, Jun 06, 2015, 12:40 AM UTC

ryandrake wrote: post #30

twoodfin wrote: post #11

Earlier quoted context omitted.

Stuck overseas in the sense that corporations aren't willing to pay American taxes... Why should Apple pay American taxes on the profits from a product manufactured in China and sold in Germany? (Albeit "Designed in California"!)

Why not? If I, as a US Citizen, moved to China or Germany to work there, I still owe US taxes on my income there.

Which is globally considered completely ridiculous and only the US does it. The moment you move abroad and live there, and perform work there, you ought to be taxed there. After all, you live there. You enjoy the streets, the parks, the police, the infrastructure etc etc, paid for by taxes, to which you ought to contribute.

But what Apple does is enjoy all of that in the US to which it contributes sub-standard taxes, manufactures in China, sells in Germany, but pays Ireland a large portion of its taxes, which in Ireland are diminished to a small amount. That's quite silly.

Sure if Apple created an EU HQ and did a large amount of design, manufacturing, sales, engineering etc, then it's fine if pays taxes there. But it does all its engineering and design (the bulk of the company) in the US, but pays little taxes there.