cash_reserves   9

James Courtovich: What Uber and School Choice Have in Common - WSJ
By JAMES C. COURTOVICH
Sept. 28, 2014 6:57 p.m. ET
94 COMMENTS

Innovation also unlocks the value in idle cars, rooms, tools and hands—and opens a channel for billions of dollars of capital to spur economic growth and create new jobs. "Money is like blood; it must flow. Hoarding and holding on to it causes sludging . . . and, like clotted blood, it can only cause damage." Adam Smith ? Try Deepak Chopra, doctor and two-time Barack Obama backer.
sharing_economy  Uber  monopolies  idle_funds  capital_flows  cash_reserves 
september 2014 by jerryking
Larry Fink: “We need confidence back”
Jan. 24 2013 | The Globe and Mail |

BlackRock is huge. Are you getting opportunities that individual investors are not?

That's such an open-ended question that it's kind of meaningless. Is the sky blue? I have offices worldwide. I talk to clients worldwide. That's information, but it's not inside information. It's knowledge from being an active participant. We are serving our clients better by doing that. Do I have a better understanding of what's going on in the markets than an individual? I would hope so.

What were the biggest lessons investors should have learned from the financial crisis?

There were many of them. There was way too much leverage in the system, and this is one reason that economies still are not fully out of their doldrums. Institutions really didn't have a good handle on their risk in 2008, either. You could argue that, rather than too big to fail, some of them were too big to understand, too big to manage. Also, when all that leverage was sucked out at once, the whole world became correlated. That aggravated things. Hedges that people thought would minimize their exposures did not. It took a lot of liquidity and capital supplied by central banks to steady things.

Look, from an equity investor's perspective, the beauty of the world right now, and the negative, is that there's so much uncertainty, such a lack of confidence.

How would you invest $100,000 right now?

It depends on your age. If you're 22 years old, I'd put all of that into stocks. But that's me. Before I'd even answer that question, I'd ask: Tell me, how neurotic are you? Can you live with short-term losses? Can you accept the need to hold? Is your holding period 10 years, 20 years? Are you frightened of volatility? It's a cardinal sin if we think that one size fits all. And if you're looking at your mobile device every day to see what the markets are doing, to see if your $100,000 is up or down, that's not good.
Laurence_Fink  BlackRock  investing  investment_advice  liquidity  market_intelligence  questions  cash_reserves  lessons_learned  mistakes  idle_funds  confidence  problem_definition  unfair_advantages 
january 2013 by jerryking
Animal spirits will stir buyout barons before CEOs
December 18, 2012
Print Print | ShareThis
Animal spirits will stir buyout barons before CEOs
By Jeffrey Goldfarb
CEOs  deal-making  private_equity  economic_dynamism  buyouts  idle_funds  cash_reserves 
december 2012 by jerryking
A Capitalist’s Dilemma, Whoever Wins the Election - NYTimes.com
November 3, 2012 | NYT| By CLAYTON M. CHRISTENSEN.

cash hoards in the billions are sitting unused on the pristine balance sheets of Fortune 500 corporations. Billions in capital is also sitting inert and uninvested at private equity funds.

Capitalists seem almost uninterested in capitalism, even as entrepreneurs eager to start companies find that they can’t get financing. Businesses and investors sound like the Ancient Mariner, who complained of “Water, water everywhere — nor any drop to drink.”

It’s a paradox, and at its nexus is what I’ll call the Doctrine of New Finance, which is taught with increasingly religious zeal by economists, and at times even by business professors like me who have failed to challenge it. This doctrine embraces measures of profitability that guide capitalists away from investments that can create real economic growth.

Executives and investors might finance three types of innovations with their capital.
(1)“empowering” innovations. These transform complicated and costly products available to a few into simpler, cheaper products available to the many.

The Ford Model T was an empowering innovation, as was the Sony transistor radio. So were the personal computers of I.B.M. and Compaq and online trading at Schwab. A more recent example is cloud computing....Empowering innovations create jobs, because they require more and more people who can build, distribute, sell and service these products. Empowering investments also use capital — to expand capacity and to finance receivables and inventory.
(2) “sustaining” innovations. These replace old products with new models. For example, the Toyota Prius hybrid is a marvelous product. But it’s not as if every time Toyota sells a Prius, the same customer also buys a Camry. There is a zero-sum aspect to sustaining innovations: They replace yesterday’s products with today’s products and create few jobs. They keep our economy vibrant — and, in dollars, they account for the most innovation. But they have a neutral effect on economic activity and on capital.
(3) “efficiency” innovations. These reduce the cost of making and distributing existing products and services. Examples are minimills in steel and Geico in online insurance underwriting. Taken together in an industry, such innovations almost always reduce the net number of jobs, because they streamline processes. But they also preserve many of the remaining jobs — because without them entire companies and industries would disappear in competition against companies abroad that have innovated more efficiently.

Efficiency innovations also emancipate capital. Without them, much of an economy’s capital is held captive on balance sheets, with no way to redeploy it as fuel for new, empowering innovations....The economic machine is out of balance and losing its horsepower. But why?

The answer is that efficiency innovations are liberating capital, and in the United States this capital is being reinvested into still more efficiency innovations. In contrast, America is generating many fewer empowering innovations than in the past. We need to reset the balance between empowering and efficiency innovations.

The Doctrine of New Finance helped create this situation.. The Republican intellectual George F. Gilder taught us that we should husband resources that are scarce and costly, but can waste resources that are abundant and cheap. ...in the 1930s and the ‘50s, capital was relatively scarce in our economy. So we taught our students how to magnify every dollar put into a company, to get the most revenue and profit per dollar of capital deployed. To measure the efficiency of doing this, we redefined profit not as dollars, yen or renminbi, but as ratios like RONA (return on net assets), ROCE (return on capital employed) and I.R.R. (internal rate of return). ...

Three ideas to seed a productive discussion:
(A) CHANGE THE METRICS. We can use capital with abandon now, because it’s abundant and cheap. But we can no longer waste education, subsidizing it in fields that offer few jobs. Optimizing return on capital will generate less growth than optimizing return on education.
(B) CHANGE CAPITAL-GAINS TAX RATES
(C) CHANGE THE POLITICS
Clayton_Christensen  capitalism  metrics  George_Gilder  Gilder's_Law  taxation  tax_reform  innovation  idle_funds  taxonomy  Fortune_500  cash_reserves  abundance  ratios  ROCE 
november 2012 by jerryking
At Davos, Leaders are Debating Whether Corporations are More Powerful Than Governments
January 27, 2012 | TIME.com | By Rana Foroohar.

The top companies seem to exist in a world apart — they are booming, and their executives are prospering. If there is a meta theme to this year’s World Economic Forum in Davos, it is that the world’s largest companies are moving on and moving ahead of governments and countries that they perceive to be inept and anemic. They are flying above them, operating in a space that is increasingly disconnected from local concerns, and the problems of their home markets. And if the conversations here are any indication, they may soon take over much of what government itself does....The problem was nicely captured in this week’s New York Times piece on Apple, looking at why the iPhone is mostly made outside America. As one of the company’s executives put it, “We don’t have an obligation to solve America’s problems.” It’s a sentiment that was echoed on Time’s Board of Economists’ panel, where business leaders blamed for not sharing the $2 trillion in wealth sitting on corporate balance sheets argued that they did create jobs and prosperity — just not in this country.....Labor economist Clyde Prestowitz pointed out as much in an article in Foreign Policy this week where he noted that while Apple may not think American economic issues are it’s “problem,” it certainly depends on the Seventh Fleet to keep Asian waterways safe and clear so that it can deliver it’s products.....A lot of people here in Davos — people like Nobel laureate Chris Pissarides, and a number of high level investors I spoke with — say that we can’t innovate or educate our way out of this problem. It’s only going to get worse, particularly as a coming automation revolution starts to hollow out white collar jobs in rich countries.
Davos  multinationals  Apple  globalization  cash_reserves  job_destruction  job_displacement  downward_mobility  automation  hollowing_out  white-collar  developed_countries  Nobel_Prizes  large_companies  statelessness 
august 2012 by jerryking
Tear down those mountains of cash
Jul. 21 2012 | The Globe and Mail | Doug Saunders.

Corporations/multinationals are hoarding cash, which is strange, because this should be a great time for companies to invest: low prices, low interest rates, cheaper labour costs. A sensible company would build up cash during boom times – when investments are more expensive – and spend it during recessions, when consumer demand is weak and capital is cheap....Saunders argues for taxing those cash reserves.
Doug_Saunders  debt  cash_reserves  multinationals  interest_rates  idle_funds 
july 2012 by jerryking
Gap Widens Between Tech Richest and the Rest - WSJ.com
MARCH 16, 2010 | Wall Street Journal | Ben WORTHEN. A handful
of cash-rich companies are consolidating power in the technology
industry, using their wealth to expand into new businesses and making it
harder for small and midsize competitors to break through. Why the
industry is evolving this way is rooted in balance sheets. Over the past
2 years, Apple Inc., Oracle Corp., Google Inc., Microsoft Corp. and 6
other large tech companies have generated $68.5 billion in new cash,
compared with just $13.5 billion for the other 65 tech companies in the
S&P 500 Index combined. Because of their massive cash accumulation,
these companies can afford to take risks that smaller companies can't
at a time when the economy remains fragile. The result is a bifurcated
tech landscape, says Erik Brynjolfsson, a professor at MIT's Sloan
School of Management.
Apple  barbell_effect  Ben_Worthen  Big_Tech  cash  cash_reserves  consolidation  Erik_Brynjolfsson  Fortune_500  Google  large_companies  market_power  Microsoft  new_businesses  Oracle  risk-taking  small_business  start_ups  trends  winner-take-all 
march 2010 by jerryking

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