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SoftBank’s debt obsession

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Re: SoftBank’s debt obsession

#81

Post by gammateam »

baybal2 wrote: post #80
gammateam wrote: post #79

Earlier quoted context omitted.

Saudi Arabia could already do LBOs in Western countries, well you think they can take out more leverage because of the restrictions on debt in Islamic culture? I would say the Softbank entity shields them in case things go down, like after the things that went down.

At least nominally it does provide them a minute degree of risk isolation, and they surely want to have an executor better suited dealing with dotcom hipsters than some Saudi guy with beard and a hoodie.

> and they surely want to have an executor better suited dealing with dotcom hipsters than some Saudi guy with beard and a hoodie

Yes, but not for those reasons. The royal family stewards of any Saudi fund would have been educated in the US or Canada and very versed in these fields, and would be indistinguishable from all the people with middle easterner decent that have navigated Western institutions, like Steve Jobs.

Re: SoftBank’s debt obsession

#82

Post by sytelus »

Virtually all companies including GOOG, MSFT, FB take on same amount of debt as their cash on hand. The thing is that even at 5-7% interest rate, it is fairly easy to find use of money that easily pays off interest and leaves money in hand. So if you have X dollars, you borrow again it to get another $X. Your net revenue would typically increases by billion or two dollars.

Re: SoftBank’s debt obsession

#83

Post by webninja »

brownbat wrote: post #61
ericjang wrote: post #12

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…

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.

That is demonstrably not true. 1968 was a positive year!

1968: +11%.

1969: -8.6%.

1970: +3.6%.

1971: +14.5%.

1972: +19.2%.

$1 of S&P500 in 1968 would be worth $1.23 in 1978, 10 years later.

There are large drops in some of the years, but they are usually followed by outsized rallies in the years afterwards.

Source: Moneychimp’s CAGR of the Stock Market calculator. http://www.moneychimp.com/features/market_cagr.htm

Re: SoftBank’s debt obsession

#84

Post by brownbat »

webninja wrote: post #83
brownbat wrote: post #61

Earlier quoted context omitted.

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.

That is demonstrably not true. 1968 was a positive year! 1968: +11%. 1969: -8.6%. 1970: +3.6%. 1971: +14.5%. 1972: +19.2%. $1 of S&P500 in 1968 would be worth $1.23 in 1978, 10 years later. There are large drops in some of the years, but they are usually followed by outsized rallies in the years afterwards. Source: Moneychimp’s CAGR of the Stock Market calculator. http://www.moneychimp.com/features/market_cagr.htm

Inflation adjusted were the key words.

Even your link admits poor performance during periods of high inflation, and gives several other example periods.

But here was my original source:

http://www.multpl.com/inflation-adjusted-s-p-500

With your link, if you're just talking about value of the stocks and controlling for inflation, one dollar of stocks in 1969 grows to only $1.03 in December 1991.

Re: SoftBank’s debt obsession

#85

Post by fujimotos »

TomVDB wrote: post #57
Simon_says wrote: post #48

Earlier quoted context omitted.

The key is consistently. The S&P 500 returns are wildly variant, and the 9~ % only comes from averaging a century of growth. Whole decades might see a loss.

Based on numbers here: https://seekingalpha.com/article/2789035-s-and-p-500-index-r... 1940-1950: 9.3%/y 1950-1960: 20.0%/y 1960-1970: 7.7%/y 1970-1980: 5.9%/y 1980-1990: 17.2%/y 1990-2000: 18.2%/y 2000-2010: -1.0%/y So only decade with negative growth. Add in the depression and you'll probably see a bunch more...

You need to consider inflation. In 1970, the inflation rate was 7-8%/y on average, so the "growth" these numbers imply did not exist in reality.
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