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That just means that at current interest rates, the stock's forward P/E exceeds the rate of interest. It's rational to borrow money to buy stock if the earnings spun off by the stock exceed the rate of interest. You're basically arbitraging against the bank: the bank gives you money to buy out people who think the stock is overvalued, you give them a set amount of interest for the money, and if it turns out you're right and the stock's future earnings exceed the price of that money, you pocket the difference at the expense of people who left the market. If you're wrong and earnings are less than the interest rate, it's reflected in net income, the stock drops, and you (and the rest of the shareholders) eat the difference, often in a dramatic fashion.
With low interest rates, high corporate profits, and low growth, I'd expect to see a lot of debt added to balance sheets; it's a way to lever up the capital structure to the benefit of existing shareholders, as long as profits remain high and interest rates remain low. (And corporate bonds/loans are usually fixed interest, so the interest rates are locked in until they need to go back to the debt markets.)
> If you're wrong and earnings are less than the interest rate, it's reflected in net income, the stock drops, and you (and the rest of the shareholders) eat the difference, often in a dramatic fashion.
Or you’ve already moved on, and the next CEO eats the difference. The incentives between those two vary wildly.
> it's a way to lever up the capital structure to the benefit of existing shareholders, as long as profits remain high and interest rates remain low
It’s only rational up to some level of indebtness (and often companies go too far). If you take on debt just because you can, how are you going to delever the balance sheet when earnings go down and interest rates go up?
The S&P Global source data[1] has a list of the top 20 Q4 buyback totals, as well as their buyback numbers for selected historical periods. It would be interesting to see how much debt those companies took on during those periods. The top company over the past 5 years, Apple, has been notorious for sitting on a massive cash reserve.
Our tax policy encourages this. You can write off the interest you pay to bondholders, but you can’t write off the dividends you pay to shareholders. Everyone involved (except for the government) is better off if you sell bonds and buy back stock.
The recent reform puts some limits on deductibility of interest expenses, but I don’t know what is the practical impact of that cap (30% of adjusted taxable income = earnings before interest, depreciation, amortization, and taxes).
Theoretically as interest rates go up and corporate taxes go down the benefits of such leveraged recaps should soften. On a stand-alone basis if a firm needs to increase leverage to find an optimal cost of capital, adding debt and buying back stock is a reasonable strategy.
They have survived the internet revolution where other businesses have been disrupted. No startup is even close to chipping away their collective control. So they are empowered to do as they please.
I suspect a big reason for this is that merchant agreements prevent you from directly passing on the cost of cards to customers. So if you accept Visa, MasterCard, and payment form X (where X could be cash, bitcoin, Venmo, whatever), the price you charge customers is the actual price you want to set plus the Visa/MasterCard fees, even if they pay with form X.
One way a disruptor could tackle this is by providing all (or even almost all) of those fees as cash back - giving everyone 2.5% cash back regardless of their creditworthiness / ability to get a sweet rewards card would be very popular. But then you'd probably want to not do that at merchants that aren't accepting traditional credit cards, and I'm not sure how customers would feel about this.
I think you are confusing what the article means by clutter. You don't keep things in the third room that are unnecessary. It is just that spending time organizing them in a system that would appear visually de-cluttered would be a waste of time. Your third room might eventually need to be cleaned out once your cache gets full of things that, for one reason or another, you don't need anymore.
The issue seems to be with how Windows handles file system operations. They allow filters to operate over each request. These filters are like hardware drivers in that they are created and maintained by third parties. So, MS has no real ability to change how things work because they don't have absolute control in the same way that Linux does over the operations (Linux device drivers are part of the kernel)
I watched the movie last night and it was good for what it is. I wonder if Netflix wanted to jump start something they genuinely thought was good but was being buried by all the other things they are offering. Maybe they thought the ends justify the means if their costumers are entertained.
The movie drives me crazy, because they had an amazing premise and set up a meaningful metaphor, and then totally just dumped it.
I think at the beginning the doctor literally says "ignoring your problems won't make them go away", it's extremely on-the-nose, and the bulk of the film is about trust and teamwork and that seems like it's going somewhere, and then you get to the end, and it like... nothing. Nothing is learned. Nothing changes.
The doctor even comes back at the end and you go "oh boy here comes the moral when we learn what this movie really was about" and she's all like "yay now we can be blind to our problems together" roll credits. There was so much opportunity in the premise and it's totally squandered.
I was hooked at the start just for the Lovecraftian cosmic horror concept rather than some sort of moral metaphor (didn't notice) but it just goes nowhere after the cool introduction.
Though at first my reaction was "oh look, it's 'A Quiet Place' but with sight instead of sound."
Funny how we're here discussing it now on the front page of HN though. If this tweet gets picked up by HN and other large forums, then I'll have to give Netflix marketing a "well played."
You look around the table and see if anybody is currently serving themselves. If not you rotate a little ways. There is usually someone else who wants it turned. Since most of the meal is spent grazing and serving small amounts, the table really never stops turning.
The article mentions that reality of more-output-less-jobs by stating that the workers are required to work harder, because the boss threatens automation if they don't. It is the fauxtomation (the author's word) that is scaring the workers to produce more.
I guess the point of view is leftist because it takes into account the worker's welfare. That doesn't seem like a bad side to be on...
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Ordoro is an all-in-one ecommerce logistics platform. We holistically solve common back-office issues online sellers encounter — shipping label printing, multichannel inventory management, automated dropshipping, returns processing, and reordering — through an intuitive web app.