71–80 of 82 posts
Bad idea: Being dependent on a single company for your salary while also holding mostly that company's stock in your investment portfolio. Worse idea: Also investing in that same company's highly risky VC fund. Worst idea: Borrowing money to do so.
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Their last Uber investment is under water... wouldn't be surprised if the $2b in WeWork stock they purchased is crushed as well at IPO time -- but at least they didn't follow through with the $8b they initially promised to Adam.
I read that SoftBank structured their investment in some way that they made money on the IPO even though the price was below what they bought in at. It didn't really make any sense to me, but I wanted to ask here: Is there any truth to that? And if so how did it work?
During private fundraising, investor (vs founder) stock generally has preferred rights when the company is sold and/or liquidated. There might also be restrictions on who and how someone can sell their common shares. This depends on the investors and the terms that were negotiated during fundraising.
So common stock generally is sold at a discount because it doesn't have any of these protections, and it's basically last in line to receive any payout.
However during IPO, often preferred stock converts into normal common stock so that it can be sold to Joe Smuck (or their pension fund institutional) investor.
Hence it's an arbitrage play; you purchase common at say a 30% discount in a late round and then sell it on the market for full price.
Bad idea: Being dependent on a single company for your salary while also holding mostly that company's stock in your investment portfolio. Worse idea: Also investing in that same company's highly risky VC fund. Worst idea: Borrowing money to do so.
Softbank's deals - Sprint, WeWork, and now this - make me question their financial intelligence.
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If you want a full comprehensive understanding of what is going on I highly recommend : - https://www.amazon.com/Princes-Yen-Central-Bankers-Transform... There is a huge overlap here with MMT ( Modern Monetary Theory ), but the book was published way before MMT become more widely read. Richard studies what happened in Japan from an economic history prespective. ( I will do a dis-service to the whole topic trying to e…
> Japan specifically could print unimaginable amount of money and use it to create whatever technology they want. And they're not doing this because...? We are living in truly dangerous times if people actually buy into this nonsense.
Japan was way too successful as a planned centralized economy.
Japan can't do it anymore because it would violate international treaties they signed with the US and EU.
Specifically the BOJ has been trying to shake Japan off from a centralized cartelized economy to a market based economy, but it's not easy to change structural conditions.
Have a read on Richard's work, he spent 10 years in Japan with the BOJ.
The wildcard is China, who really do not care what anybody thinks about what they do.
So it will be interesting to watch the US / EU deal with deflation, low growth.
While China continues to march ahead in technology.
It's important to understand what SoftBank is, and why betting against them is a bad idea. Globally we are going through a period of deflation. Japanese Banks have been dealing with this problem for 30 years now. BOJ can print money ( yen ) and flood the world and the value of the yen would still go up ! The reason is there is a lot of latent demand for Japanese exports. When Softbank invests in lets say India, ( thr…
> Globally we are going through a period of deflation. What? Pretty much every country has inflation [0]. > BOJ can print money ( yen ) and flood the world and the value of the yen would still go up ! That is definitely not true. If they were to print 518,755,944,000,000 Yen (2017 estimate for their gdp) and flood the market with it (say by giving every citizen an equal share as a lump sum a la helicopter money [1])…
Are you sure about that ? What if there is no demand ? Japan did try helicopter money, and all their citizens just purchased bonds increasing public debt, without creating any inflation or causing the yen to drop.
BOJ has been actively trying to make the yen fall.
I agree if BOJ hands everybody in the world a large amount of Yen, then the yen would drop ( initially ), but suddenly every Japanese factory would have to start churning out all types of Japanese widgets - it would roar Japan back into 6% growth, and at the same time cause a world wide collapse of demand for European / American / Chinese / Korean exports ( cars, electronics. toys ).
So do you see why other industrialized countries might not allow Japan to just hand Yen out to foreigners ? Japan would be "exporting" deflation to other industrialized countries.
Over time as the world absorbs Japanese imports / standards and abandons everything else - there would be no demand for lets say FCC approved electronics.
American students who now have access to yen might go to Japan to study programming instead of American colleges and learn Prolog.
Take this to it's logical conclusion and in a decade the value of the Yen goes up in relation to the Korean Won, Euro, USD.
Of course this is a fantasy, but since you started with a hypothetical, I had to point out how your conclusion might be wrong. Especially since this is exactly what the Japanese have been doing post WW2, the Americans post Bretton Woods with euro dollars, and now the Chinese are flooding the world with the RMB.
> but your also effectively saying that they were able to swindle 40 billion dollars from the Saudis and I say swindle because the Saudis don't care 1 bit about Japanese exports and are 100% in it for the initial return on investment.
The Saudis have been swindled already when they bought US treasuries, with QE and low yields. They could have owned assets that when up in value due to QE but guess what ? all of it was owned by Americans.
This is why the Saudis have abandoned the treasuries market, so have the Chinese ( they are spending it on the Belt and Road ).
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Not OP but here's one way: Softbank invests in Uber India pushing up automobile demand[1]. Indian drivers buy cars manufactured by Maruti Suzuki (54% market share [2]). Maruti Suzuki is a JV between an Indian company (Maruti) and Suzuki (Japan) where-in Maruti pays 6% of sales as royalty for design and other facilities. In addition, you have to realize that Japan exports $35b of auto parts and $101b of automobiles [4…
Okay, now where does all the demand for these Indian taxi services come from that are actually going to pay for all of these automobile imports? It's not like Uber demand is insatiable. The notion that investing in Uber is going to drive the auto industry (which is completely contrary to the mission of these transportation companies) is an odd one. I can see that, at the margins, a company can spend money where it th…
Lets take some of your conclusions to its limits shall we ? and see how much predictive power it truely has.
In 2008, why did the Fed print 4 trillion USD ? If we cannot spend our way to riches, surely the fed should have shut the liquidity taps ?
If the Fed did stop the liquidity taps - it would have caused a second great depression like event, surely we cannot spend our way to being rich ? Many people in the 1930s would have agreed with you !
You could argue that "The fed has made the situation much worse and the chickens will come home to roost".
I do not see any chickens 10 years in, do you ? in fact everything seems to prove the amount of money printing was not enough due to non-existant inflation and outright deflation.
Lets go back in time to the 10th Century, to the origin of fiat currency - the emperor of china build the great wall, how did he pay for it ? well he just issued paper money to create new purchasing power which allowed him to build his wall.
1000 years in - we just sit back and admire how it was possible to build such an engineering marvel in ancient times.
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The chinese have a much more sophisticated understanding of money ( they were the ones who invented it after all ) - and they are using it to build railways, cities, supply chains, ....
1000 years in hopefully we are not ruled by people who do not understand the role of money in a modern state or else we will be left wondering how china was able to pay for terraforming Mars and turn an entire new planet chinese.
Sure we'll pay you, but the only place you can shop is the company store.
No. There's no requirement they invest the loans in the Vision Fund. Nor is there a requirement to take out the loan. We already see something similar at law firms - partnership in a firm means literally buying into it, and one of the perks you receive at many law firms is the ability to take out a loan at favorable rates, particularly to help with said buying in.
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I checked that and I don't see that requirement for Goldman Sachs or any other partnership set up - the potential for corruption and nepotism is huge if its pay to play. Some form of coops Mondragon for example do but that is a very different type of employment.
Goldman's partnership today is that in name only. Prior to the firms IPO new partners did indeed have to buy their way in (via loans!).
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Goldman's partnership today is that in name only. Prior to the firms IPO new partners did indeed have to buy their way in (via loans!).
The full value? GS was huge even before the IPO no individual could ever expect to buy the value of their share surly?