I would assume it was a Unitarian Universalist (UU), which is what I am. I remember going to Sunday School, learning about Noah’s arch, playing the evolution game, practicing medication, being taught how the brain works (The instructor brought in real human brain in formaldehyde – we were 9).
Theology and Science are two very important methods of thoughts – designed to asked different questions - Why are we hear and how things work.
UU are Existentialist in matters of faith. i.e. You personal belief (or non-belief) is based on your own personal experiences and not on external facts. And the best way to celebrate faith is to get together and explore it communally. That is, you believe in God because you have had a personal experience, not because Rabbi points to a burning bush while a priest point’s to a hole in the ground. As such there is a wide range belief. You can have people of Christen, Buddhist, Earth Centric, and Secular Humanism all in the same congregation.
My brother-in-law lives within a couple of hundred of feet of one and he can’t tell that it’s there so I am guessing that it’s under 200. (and the individual Windmills are co-owned by the farmer(landholder) and the energy company, so there’s a little more information floating about.) Well, what get’s me is when the people are taking about the “fact” that nobody knows the impact that these things will have on people. My initial reaction was that we still have not figured out the full impact of dihydrogen monoxide on people - yet we still use the stuff daily. You can never prove something is safe – they will always be another test or another fact case that can be tried out.
What type of risk / return parameters do you want to use? We know the negative impacts of coal fired electric generators (miner’s deaths, particle emissions, global warming, etc.) and seem to be o.k. with them. Wind power in this context seems to offer a much better profile – but we, as a society, are freaking out with unknown unknowns.
Sigh. I hate to give credence to urban myths and junk science, but if you want to know of the fear of the unknown, here is a trailer for a movie that will explain it all.
I know that France had laws to push French content, so I can see a shift to digital distribution would undermine local content laws and hit French artist that way.
But I would guess that young people are just not used to paying for music. I mean, more young people, if they were to buy music, would do it online. But a lot of them just won’t.
Which makes the summary off. Who cares if there is a large percentage increase in digital music - from a low base. That just means people who are buying music are switching for one format to another. Maybe buying a top single track is more cost efficient than buying an album? That goes too for the monthly subscription / rental model. (For a bad analogy, after I got Netflix my movie going dropped, so my total dollars spent on “movies” dropped.)
This is something of a counterpoint. Amanda Bennett wrote an article about her husband's death. He had cancer and was expected to live a year or 2 more. Aggressive, and expense, treatment, meant that he live for 7 more - some of them good - some of them bad. So he beat the odds and thus can be considered a success. On the other hand, Bennett tries to weigh the cost of treatment, quality of life, and how the health care system should be structured. She does not come to concise answer, but she writes very well about the struggle.
Jobs had a lot of failures - and he was kicked out of Apple for good reasons. Next was also (financially) a failure.
Then came Pixar (a hardware company when Steve joined) and the turn around at Apple.
I am not a fanboy of Apple, but you have to respect what he did. He had a bold vision - which he always had. But then he executed and managed people to get there. He couldn't do that initially at Apple. He had to leave to mature.
I guess my point is that they would not pay for it. How would you make them pay?
A lot of people criticize corporations for focusing on the next quarter - which just is not true. All that I know of make long term plans – as long as they can see. Which is about 10 years. If you try to spreadsheet out more than 10 years, too many variables become unknowns. What will interest rates be and where will technology be. Etc.
On the other hand, it’s hard to capture the technology. Everybody loves to cite the fact that the moon shot created the microchip. Should Intel, 50 years on, be paying NASA royalties? Basic research has one of those wonderful things call positive externalities – people benefit from the work even though they did not pay for it.
I am for corporate profiteering as much as the next guy – but there is also using the right tool for the right problem – and private research is not the right tool. On the other hand, look at the good it would create. Cheap power would not just make a bucket load of cash for the power companies, but also save a bucket load for all the users of power. Let private interest build as they like and tax the profits afterword’s.
I am not sure what your point is. Are you for or against public funding of basic research?
And I think you are missing a critical point. Basic research is one of those things that corporations do poorly. It’s high risk, has a long time horizon, expensive, and hard to patent (i.e. discovering basic concept can take years to develop into a workable product, at which time the original patent has expired – if you can patent the basic discovery in the first place). Companies can handle some of these issues, not all.
If we want fusion power we can’t depend on market forces to do it.
If I understand correctly, the steps needed to get to a commercial reactor are known. How we are going to execute those steps are unknown – and have been harder to solve than planned.
A Unknown Unknown would be brand new unexpected problems popping out. Think Black Swans.
i.e. For a Tokamak reactor to work you need a magnetic field of a known strength. The issue has not been with weird, unexpected issues occurring with the field strength (Unknown Unknown), it’s about generating the field in the first place (Known Unknown).
Cook will have to pay ordinary income on that dividends. I am sure he rather sell his stock for cash and pay long term capital gains.
See Modigliani and Miller "Irrelevance of dividend policy". They say that in a efficent world it does not matter if the company pays a dividend or not. Dividends are not efficent to pay out from a tax viewpoint. He's not doing this for selfish short term reasons. (Short Term being the imporant part here.)
Well, the point of owing shares is future free cash flows to the investors, technically speaking. Which leaves us with 2 more reasons.
#1: Long Term Capital Gains are normally tax at a lower rate than Ordinary Income (i.e. Dividends). So If I have a choice to the company giving cash to me by a stock buyback, which I would sell my shares at the LTCG rate, or ordinary dividends - I would chose the stock buyback.
#2 The second is psychological. People who buy dividend paying stocks expect a nice, smooth dividend. Often they are retirees suffering from Money Illusion. The point being, if Apple (or any other company) paid out all of their profits the dividends would zig zag all over the place and people / the market will always overact to the quarterly news instead of focusing on the long term prospects of the company. Better to underpay the dividends, so it can be nice and smooth. If the cash gets too high, do a stock buyback - people who buy the stocks for the dividends will tend to ignore this.
For high risk, high return start ups, like tech, maybe not.
But it will dent the low risk, low return start ups. Got a nice little business that you want to start up, like a corner shop. Expecting 5 to 15% returns per year? All of a sudden you have pushed the break even point for the investor 5 years out into the future. piss poor returns here.
The investors trades cash for shares with the company - So your right there. On the other hand, for the company the new cash, an asset, is coming into the company, This will increase both the asset account and the equity account.
The accounting transactions would be
Credit the cash account in Assets
Debit the Paid In Capital account in Equity.
If the company was issuing new debt - and thus no new equity, the accounting transactions would be:
Credit the cash account in Assets
Debit the Long Term Debt Account in Liabilities.
Selling shares is selling equity - which is kind of the opposite of debit. Well, assets are the opposite of debit, but I am sure that is were part of the cash will go..
Are we talking about companies like Samsung, who invest for the long term projects that take years to pay off and earns higher then expected return?
Or, are we talking about companies like Samsung, who spend millions of dollars to open up a cup cake shop for the CEO’s daughter?
I expect the CEO, who earns millions, to go out every day and sweat for a living. I don’t want him sitting back, taking it easy, feathering his own nest with my money. Look up Dennis Kozlowski and Tyco. Look up Bill Ford Jr. and the slow slide of Ford under his leadership.
If I own 1 share it’s just as much my money as Google’s – from both a moral and legal standpoint. Page and Brin must spend that money in the interest of all shareholders. They can’t hire girlfriends to non-jobs, vacation on the corporate jet, or indulge in flights of fantasy. (I am making this point because a lot of CEOs run their company as their private piggy bank. Google has good corporate governance as far as I can tell. )
Am I greedy? Yes I am. I am long term, risk adjusted greedy. And if you aren’t you should not be in the stock market.
How much did AT&T save from inventing the transistor? Lots How much did Texas Instrument profit from AT&T’s invention? Probably more.
Here the issue. Basic research tends to spill out all over the place. Bell labs invented a lot of cool stuff, but most of the benefit went to other companies. Other people ate Bell’s cake – and the only way to prevent this is draconian IP laws – which I am against.
Which brings us back to Google. If you have noticed, I have not said if Google’s research is a good deal or not – I am still thinking about it. It looks like they have a ton of money, no clear direction, so they are pitching ideas wildly and hoping for a home run. This tends to be a bad choice Honda’s robots and airplanes. NTT’s AI and chip research. 90% of Microsoft’s research. I could go on. The only good thing is that Google is stuff with a lot of bright people – so I am not going to bet against them. (besides, you never know – I hear a failed podcast company became Twitter.)
Bell Labs was sort of a sop to the Federal Trade Commission and monopoly laws. AT&T could have it’s national phone monopoly, but it had to contribute to the betterment of society via basic research. Which Bell Labs did fabulously.
That being said – of all the examples you mentioned – how much profit did AT&T make from these? Mind you, they are all wonderful and I am glad that we, as a society have them. But it’s very hard for corporations to turn basic research into profits. Myself, I always think about Xerox Palo Alto Research Center and how they did the ground work for the modern computer but could not execute on it.
The question that I think the writer is asking is that Google is spending a lot money that belongs to investors on long term high risk speculative projects. And the line between high risk / high return projects and vanity projects to buff the founder’s image is fine.
The point is that NASA scientist are scientist – which means that they are good at basic research, but does not mean they are good a business.
A lot of research institutions throw off start ups left and right (Stanford, MIT) come to mind. They have a staff which is good at providing start up funding and / or marketing the patents.
Politicians like this. Public spending creates small business which creates the jobs of tomorrow.
However, this is kind of hard to do with basic research because it is basic. Principals, once discovered, are universal. Applications take decades to figure out. Everybody likes to say the Moon Shot created the modern chip industry – but it had to take a really crooked path to get from one spot to the next. Ask top scientist back in the 60’s what would turn up and they would not talk about chips – they would talk about iron crystals and wonder drugs.
It’s hard to know what NASA has in storage that has any (or what) value.
Partly it’s about the experience. I attended 2 colleges.
The first, basically required everybody to live on campus and to turn in their car’s license plates.
In the second, almost everybody (and I included those who lived on campus) departed for home on Thursday evening and came back Sunday night.
The first was a better learning experience. Trapping a lot of young energetic students in one place created a lot of interesting experiences. Even “mindless” activities had a fair amount of intellectual side conversation. A real hot house environment. It’s one thing a lot of people miss when they talk about the new online learning opportunities. Some of the benefit comes from the enivomrent.
The second place was much more sterile. I think I got as good of an education in the second place, but I was more mature and really had to focus to find challenges.
Well, yes, ARM is very expensive - but that does not affect it's market value. Somebody is willing to buy it at that price.
I guess the point I was trying to make (in retrospect) is that Apple had to sell most of it's share (very cheaply) to raise money because it did not have cash. Now, Apple has an embarrassing amount of cash.
First, you talk about control. The rule of thumb is that control is worth about a 20% premium.
This is separate from the short term items you are talking about. When somebody gains more then 10% it indicates that they want to buy the whole company or take control of it to move it in a new direction. The price is reacting to the possible change in direction of the company. Or, when somebody dumps a huge amount of stock. In this case there is a short term supply / demand imbalance that can cause to the stock to fall.
30% is enough for control in most cases, but as Incbraining points out, there are a lot of exceptions.
However, 30% is enough to start consolidating balance sheets. It is also enough to start creating conflicts of interest.
i.e., if Apple made a buy out offer for Google, Google's board would have to make the decision based on all shareholders - not just what Larry and Sergey wanted.
What you are talking about is the latest trend in investment theory - behavioral economics.
The rational person makes their decision on current available information to maximize returns at the lowest risk. They should not care about the past (sunk costs, can't be changed. Mind you, I am not talking about reviewing past choices to gain deeper and better wisdom) and know the uncertainty of investing in the future.
However, people are emotional. They tend to hold on to losers too long, tend to place bigger bets, etc.
A economic noble prize winner who was heavy into investment theory (I think it was either Black or Merton) tended to keep a large chunk of his money in boring bond and index funds so he would not suffer the regret of making a "bad" choice. "Bad" in the sense of having made the right choice with the current information only to be surprised by the future.
Slashdot Mirror
I would assume it was a Unitarian Universalist (UU), which is what I am. I remember going to Sunday School, learning about Noah’s arch, playing the evolution game, practicing medication, being taught how the brain works (The instructor brought in real human brain in formaldehyde – we were 9).
Theology and Science are two very important methods of thoughts – designed to asked different questions - Why are we hear and how things work.
UU are Existentialist in matters of faith. i.e. You personal belief (or non-belief) is based on your own personal experiences and not on external facts. And the best way to celebrate faith is to get together and explore it communally. That is, you believe in God because you have had a personal experience, not because Rabbi points to a burning bush while a priest point’s to a hole in the ground. As such there is a wide range belief. You can have people of Christen, Buddhist, Earth Centric, and Secular Humanism all in the same congregation.
My brother-in-law lives within a couple of hundred of feet of one and he can’t tell that it’s there so I am guessing that it’s under 200. (and the individual Windmills are co-owned by the farmer(landholder) and the energy company, so there’s a little more information floating about.)
Well, what get’s me is when the people are taking about the “fact” that nobody knows the impact that these things will have on people. My initial reaction was that we still have not figured out the full impact of dihydrogen monoxide on people - yet we still use the stuff daily. You can never prove something is safe – they will always be another test or another fact case that can be tried out.
What type of risk / return parameters do you want to use? We know the negative impacts of coal fired electric generators (miner’s deaths, particle emissions, global warming, etc.) and seem to be o.k. with them. Wind power in this context seems to offer a much better profile – but we, as a society, are freaking out with unknown unknowns.
Alas, no - this is left wing crazies, not right wing ones.
Sigh. I hate to give credence to urban myths and junk science, but if you want to know of the fear of the unknown, here is a trailer for a movie that will explain it all.
http://windfallthemovie.com/index_1.html
I know that France had laws to push French content, so I can see a shift to digital distribution would undermine local content laws and hit French artist that way.
But I would guess that young people are just not used to paying for music. I mean, more young people, if they were to buy music, would do it online. But a lot of them just won’t.
Which makes the summary off. Who cares if there is a large percentage increase in digital music - from a low base. That just means people who are buying music are switching for one format to another. Maybe buying a top single track is more cost efficient than buying an album? That goes too for the monthly subscription / rental model. (For a bad analogy, after I got Netflix my movie going dropped, so my total dollars spent on “movies” dropped.)
http://www.businessweek.com/magazine/content/10_11/b4170032321836.htm
This is something of a counterpoint. Amanda Bennett wrote an article about her husband's death. He had cancer and was expected to live a year or 2 more. Aggressive, and expense, treatment, meant that he live for 7 more - some of them good - some of them bad. So he beat the odds and thus can be considered a success. On the other hand, Bennett tries to weigh the cost of treatment, quality of life, and how the health care system should be structured. She does not come to concise answer, but she writes very well about the struggle.
Jobs had a lot of failures - and he was kicked out of Apple for good reasons. Next was also (financially) a failure.
Then came Pixar (a hardware company when Steve joined) and the turn around at Apple.
I am not a fanboy of Apple, but you have to respect what he did. He had a bold vision - which he always had. But then he executed and managed people to get there. He couldn't do that initially at Apple. He had to leave to mature.
I guess my point is that they would not pay for it. How would you make them pay?
A lot of people criticize corporations for focusing on the next quarter - which just is not true. All that I know of make long term plans – as long as they can see. Which is about 10 years. If you try to spreadsheet out more than 10 years, too many variables become unknowns. What will interest rates be and where will technology be. Etc.
On the other hand, it’s hard to capture the technology. Everybody loves to cite the fact that the moon shot created the microchip. Should Intel, 50 years on, be paying NASA royalties? Basic research has one of those wonderful things call positive externalities – people benefit from the work even though they did not pay for it.
I am for corporate profiteering as much as the next guy – but there is also using the right tool for the right problem – and private research is not the right tool. On the other hand, look at the good it would create. Cheap power would not just make a bucket load of cash for the power companies, but also save a bucket load for all the users of power. Let private interest build as they like and tax the profits afterword’s.
I am not sure what your point is. Are you for or against public funding of basic research?
And I think you are missing a critical point. Basic research is one of those things that corporations do poorly. It’s high risk, has a long time horizon, expensive, and hard to patent (i.e. discovering basic concept can take years to develop into a workable product, at which time the original patent has expired – if you can patent the basic discovery in the first place). Companies can handle some of these issues, not all.
If we want fusion power we can’t depend on market forces to do it.
In this case I think the issue is Know Unkowns.
If I understand correctly, the steps needed to get to a commercial reactor are known. How we are going to execute those steps are unknown – and have been harder to solve than planned.
A Unknown Unknown would be brand new unexpected problems popping out. Think Black Swans.
i.e. For a Tokamak reactor to work you need a magnetic field of a known strength. The issue has not been with weird, unexpected issues occurring with the field strength (Unknown Unknown), it’s about generating the field in the first place (Known Unknown).
Cook will have to pay ordinary income on that dividends. I am sure he rather sell his stock for cash and pay long term capital gains.
See Modigliani and Miller "Irrelevance of dividend policy". They say that in a efficent world it does not matter if the company pays a dividend or not. Dividends are not efficent to pay out from a tax viewpoint. He's not doing this for selfish short term reasons. (Short Term being the imporant part here.)
Well, the point of owing shares is future free cash flows to the investors, technically speaking. Which leaves us with 2 more reasons.
#1: Long Term Capital Gains are normally tax at a lower rate than Ordinary Income (i.e. Dividends). So If I have a choice to the company giving cash to me by a stock buyback, which I would sell my shares at the LTCG rate, or ordinary dividends - I would chose the stock buyback.
#2 The second is psychological. People who buy dividend paying stocks expect a nice, smooth dividend. Often they are retirees suffering from Money Illusion. The point being, if Apple (or any other company) paid out all of their profits the dividends would zig zag all over the place and people / the market will always overact to the quarterly news instead of focusing on the long term prospects of the company. Better to underpay the dividends, so it can be nice and smooth. If the cash gets too high, do a stock buyback - people who buy the stocks for the dividends will tend to ignore this.
For high risk, high return start ups, like tech, maybe not.
But it will dent the low risk, low return start ups. Got a nice little business that you want to start up, like a corner shop. Expecting 5 to 15% returns per year? All of a sudden you have pushed the break even point for the investor 5 years out into the future. piss poor returns here.
Equity = Assets - Liabilities
The investors trades cash for shares with the company - So your right there. On the other hand, for the company the new cash, an asset, is coming into the company, This will increase both the asset account and the equity account.
The accounting transactions would be
Credit the cash account in Assets
Debit the Paid In Capital account in Equity.
If the company was issuing new debt - and thus no new equity, the accounting transactions would be:
Credit the cash account in Assets
Debit the Long Term Debt Account in Liabilities.
Selling shares is selling equity - which is kind of the opposite of debit. Well, assets are the opposite of debit, but I am sure that is were part of the cash will go..
Are we talking about companies like Samsung, who invest for the long term projects that take years to pay off and earns higher then expected return?
Or, are we talking about companies like Samsung, who spend millions of dollars to open up a cup cake shop for the CEO’s daughter?
I expect the CEO, who earns millions, to go out every day and sweat for a living. I don’t want him sitting back, taking it easy, feathering his own nest with my money. Look up Dennis Kozlowski and Tyco. Look up Bill Ford Jr. and the slow slide of Ford under his leadership.
If I own 1 share it’s just as much my money as Google’s – from both a moral and legal standpoint. Page and Brin must spend that money in the interest of all shareholders. They can’t hire girlfriends to non-jobs, vacation on the corporate jet, or indulge in flights of fantasy. (I am making this point because a lot of CEOs run their company as their private piggy bank. Google has good corporate governance as far as I can tell. )
Am I greedy? Yes I am. I am long term, risk adjusted greedy. And if you aren’t you should not be in the stock market.
How much did AT&T save from inventing the transistor? Lots
How much did Texas Instrument profit from AT&T’s invention? Probably more.
Here the issue. Basic research tends to spill out all over the place. Bell labs invented a lot of cool stuff, but most of the benefit went to other companies. Other people ate Bell’s cake – and the only way to prevent this is draconian IP laws – which I am against.
Which brings us back to Google. If you have noticed, I have not said if Google’s research is a good deal or not – I am still thinking about it. It looks like they have a ton of money, no clear direction, so they are pitching ideas wildly and hoping for a home run. This tends to be a bad choice Honda’s robots and airplanes. NTT’s AI and chip research. 90% of Microsoft’s research. I could go on. The only good thing is that Google is stuff with a lot of bright people – so I am not going to bet against them. (besides, you never know – I hear a failed podcast company became Twitter.)
But Bell Labs was never meant to be profitable.
Bell Labs was sort of a sop to the Federal Trade Commission and monopoly laws. AT&T could have it’s national phone monopoly, but it had to contribute to the betterment of society via basic research. Which Bell Labs did fabulously.
That being said – of all the examples you mentioned – how much profit did AT&T make from these? Mind you, they are all wonderful and I am glad that we, as a society have them. But it’s very hard for corporations to turn basic research into profits. Myself, I always think about Xerox Palo Alto Research Center and how they did the ground work for the modern computer but could not execute on it.
The question that I think the writer is asking is that Google is spending a lot money that belongs to investors on long term high risk speculative projects. And the line between high risk / high return projects and vanity projects to buff the founder’s image is fine.
The point is that NASA scientist are scientist – which means that they are good at basic research, but does not mean they are good a business.
A lot of research institutions throw off start ups left and right (Stanford, MIT) come to mind. They have a staff which is good at providing start up funding and / or marketing the patents.
Politicians like this. Public spending creates small business which creates the jobs of tomorrow.
However, this is kind of hard to do with basic research because it is basic. Principals, once discovered, are universal. Applications take decades to figure out. Everybody likes to say the Moon Shot created the modern chip industry – but it had to take a really crooked path to get from one spot to the next. Ask top scientist back in the 60’s what would turn up and they would not talk about chips – they would talk about iron crystals and wonder drugs.
It’s hard to know what NASA has in storage that has any (or what) value.
I don't think Rothschild spoke that quote in english, so I think we may have some room for translator interpation.
Partly it’s about the experience. I attended 2 colleges.
The first, basically required everybody to live on campus and to turn in their car’s license plates.
In the second, almost everybody (and I included those who lived on campus) departed for home on Thursday evening and came back Sunday night.
The first was a better learning experience. Trapping a lot of young energetic students in one place created a lot of interesting experiences. Even “mindless” activities had a fair amount of intellectual side conversation. A real hot house environment. It’s one thing a lot of people miss when they talk about the new online learning opportunities. Some of the benefit comes from the enivomrent.
The second place was much more sterile. I think I got as good of an education in the second place, but I was more mature and really had to focus to find challenges.
Well, yes, ARM is very expensive - but that does not affect it's market value. Somebody is willing to buy it at that price.
I guess the point I was trying to make (in retrospect) is that Apple had to sell most of it's share (very cheaply) to raise money because it did not have cash. Now, Apple has an embarrassing amount of cash.
You are talking about 2 things here.
First, you talk about control. The rule of thumb is that control is worth about a 20% premium.
This is separate from the short term items you are talking about. When somebody gains more then 10% it indicates that they want to buy the whole company or take control of it to move it in a new direction. The price is reacting to the possible change in direction of the company. Or, when somebody dumps a huge amount of stock. In this case there is a short term supply / demand imbalance that can cause to the stock to fall.
And to think, at one point Apple owned 1/2 of ARM.
30% is enough for control in most cases, but as Incbraining points out, there are a lot of exceptions.
However, 30% is enough to start consolidating balance sheets. It is also enough to start creating conflicts of interest.
i.e., if Apple made a buy out offer for Google, Google's board would have to make the decision based on all shareholders - not just what Larry and Sergey wanted.
What you are talking about is the latest trend in investment theory - behavioral economics.
The rational person makes their decision on current available information to maximize returns at the lowest risk. They should not care about the past (sunk costs, can't be changed. Mind you, I am not talking about reviewing past choices to gain deeper and better wisdom) and know the uncertainty of investing in the future.
However, people are emotional. They tend to hold on to losers too long, tend to place bigger bets, etc.
A economic noble prize winner who was heavy into investment theory (I think it was either Black or Merton) tended to keep a large chunk of his money in boring bond and index funds so he would not suffer the regret of making a "bad" choice. "Bad" in the sense of having made the right choice with the current information only to be surprised by the future.