Cash-flow producing assets become more valuable during inflation.
The rich own assets, they financed these assets with debt. Debt becomes less burdensome with inflation, increasing their equity.
At the same time, lendors lose with inflation. But who are the predominant lendors now? Life insurance companies, pension funds, mutual funds, household / nonprofits, state and local govts., etc.
All of these institutions seem to be an aggregation of middle-class / poorer people vs. elites.
If you're Elon Musk you own Telsa. You're main source of liquidity is likely cash from a revolver[1]. During inflation, your debt becomes relatively smaller to your Tesla equity. Your net equity becomes larger.
I think this just leads to more inequality, more corporate control, and weaker labor bargaining power.
We'll see - hope its ok.
[1] form of debt, where Elon is the lendee and is using Tesla stock as the collateral
Even if you lose money, insider trading is still insider trading. Congress + senators 100% receive insider information. Even if its not near-term merger announcements or big federal contracts - they still have an extremely advantaged position and access to information that the general public doesn't have.
Its ridiculous that they can trade individual stocks, yet alone options.
They should be restricted from buying individual stocks, and should only be allowed to buy mutual funds and ETFs at a minimum. Pretty much any employee on Wall Street (even if "back-office") has similar restrictions.
I don't even know why this is a question - the optics of short-term levered bets from elected officials (or family of) is terrible. Completely ruins any resemblance of "public service."
Even with this, it might not be enough. Elected officials could still buy the TQQQ ETF (3x leverage on NASDAQ) prior to a stimulus bill passing. It would be too onerous to not allow any stock exposure, but maybe they should be required to disclose trades in real-time vs. at the end of every quarter.
"The thing I have noticed is when the anecdotes and the data disagree, the anecdotes are usually right. There's something wrong with the way you are measuring it," - Jeff Bezos
I think Matthew Ball on Twitter is responsible for the increased usage of "Metaverse" amongst investors, business strategists, etc.
He recently launched an ETF ($META) that indexes to "Metaverse" companies (Roblox, Unity, etc.).
I have always been pretty cynical about his takes and usage of "Metaverse." There's a lot of hand-waving and ted-talky grandstanding to make the "Metaverse" concept seem like something new, exciting and inevitable. But using "Metaverse" seems overly complicated, its just describing a large, centralized online community which isn't a new concept. World of Warcraft or Minecraft may have been the peak of the "Metaverse" so far, so it seems disingenuous to treat the "Metaverse" as something new and novel.
Kinda've stream of consciousness from me - but all this really seems like is someone with a consultant background applying frameworks and buzzwords to concepts that felt childish and unserious for so long (WoW, Minecraft, Fortnite, etc.), but now people are realizing that these companies and games can spit out serious cash, so they love someone who can package it together nicely through these frameworks and thought pieces. Boomers love this!
I've worked for Oculus and Unity and know a lot of people at Epic and Roblox so I've tried to understand what people mean by Metaverse (outside of directly referencing Snow Crash or Ready Player One). My simplified version is a 3D online game, that has the same number of users and retention as a social network. Almost by definition it has to have user generated content.
Minecraft, Roblox and Fortnite are close in various ways, and many apps have the feature set but are missing the user base.
I'm not bullish on Coinbase, but the upside case is the market cap of Visa, Mastercard, Ant Financial, Paypal, Square, Stripe, Payment Processors, Bank, Asset Managers, etc -- not just the NYSE.
Again, I don't think this will ever happen, ever. But NYSE isn't a great comparison.
FactSet and CapIQ have the capability to do this. A lot of this job is 'automated' to a certain extent, so it's not like the hours are being driven by antique software. There's just so much bespoke / custom work that goes in the PPT decks that makes full automation hard (and I'm talking about non-sexy stuff like rearranging logos or data entry...it just takes time). There's already a good amount of automation in banking between software vendors and the use of template presentations / excel spreadsheets. Any incremental bit of automation will not reduce hours for junior bankers, it will just create more work product, more meetings, etc. Blackberries, software vendors, etc. have all made bankers more efficient, but it just increases the work output, not the amount of input.
Every time IB work hours comes up in a forum of 'outsiders,' people always point towards 'more automation' or 'hire more people' as panaceas for the terrible work-life balance. But when you are in high-profile, white-collar client service, there's just no pushback between senior bankers and clients. If you are giving a presentation to a F500 CEO, you're always going to solve for the quickest deadline, and that means 100 hour weeks for the junior people. Only solution is a huge top-down cultural shift amongst senior bankers and executives.
I think there's two things that could change this: (1) the job gets such bad press that junior talent gets worse or (2) clients start pushing back on bad work conditions. But on (1), the job is so mindless and repetitive that a degradation is talent is not that big of a deal (especially compared to engineering). On (2), clients would never do this. Clients pay large fees for this work, being a banker is still perceived as a prestigious job for juniors, it's flattering to think that someone is working 100 hours a week for your company, clients don't see the pain amongst junior employees, etc. - there's so many reasons why clients wouldn't push back.
The saddest part of all of this is not that some people are highly compensated yet miserable. The saddest part is there's still hundreds of college graduates who are chasing this dream because they think it will pay dividends in the future, but most of these kids get burned out and exit to 'generalist' jobs that they really have no passion for. They could have been building a product, adding something new to society, etc.
These (software) are the most incredible the companies the world has ever seen. Sure, valuations may look crazy compared to historical norms in different industries, and may be due for a correction. But still, best businesses ever built.
Chapter 11 usually happens when a company has a level of debt that was issued at a certain valuation or time in their business performance. And then for whatever reason, the company has poor performance and the debt level no longer makes sense. Good example is oil and gas companies that raised debt when oil was $100, and now have to operate in a ~$50 oil world. Their operating cash flow has decreased a ton (>50% due to fixed costs), and it's unclear on whether they can make interest payments (and probably can not repay their principal).
The equity will clearly not make any money and the business does worse in the long-run which presents more risk for more junior creditors (the company can not re-invest in growth, business contracts are more onerous as you have credit risk, low morale w/ employees, etc.).[1]
But Chapter 11 is not something a company can do at anytime. You have to prove that the restructuring of the equity and debt makes sense to either (1) your shareholders and creditors or, if that fails, (2) a judge.
Additionally, employees and the board will have equity that will get cancelled or receive pennies. So if it's marginal on whether there could be equity value someday, the company is not going to do it. On the flipside, it's pretty frustrating if you can't issue stock options that will have value someday.
Overall Chapter 11 bankruptcy is a great thing for business... it allows companies to breathe again and re-invest in growth. As far as cons...obviously the equity investors and maybe some of the creditors lose a call option on their investment (not worth anything today, but could be in the future). But that call option may be compensated for in the restructuring agreement. But the biggest con IMO is that Chapter 11 is expensive, and usually bankers / lawyers make outrageous fees here.
That was a lot and sorta of scattered. But if you see "Chapter 11" bankruptcy you shouldn't always think "this business sucks" or "this business doesn't make a profit," but should put more blame on a financier somewhere who created a capital structure that wasn't sustainable.
[1] The company may also have upcoming maturities in more junior debt, and the more senior creditors don't want them to pay the principal. Liquidation preference is a good search term if you're interested in this.
Edit: Also worth noting that creditors don't always take a 0. Sometimes their debt is reinstated, sometimes they receive equity for their debt, and sometimes they receive pennies just to get them to agree (cheaper and faster for everyone to agree than to have a judge decide). All depends on the valuation of the business and where their debt sits.
>Chapter 11 usually happens when a company has a level of debt that was issued at a certain valuation or time in their business performance. And then for whatever reason, the company has poor performance and the debt level no longer makes sense. Good example is oil and gas companies that raised debt when oil was $100, and now have to operate in a ~$50 oil world.
That's intended as a good example (in the sense of "clear, characteristic")? I thought oil extractors were expected to hedge or buy financial instruments that ensure they'll be able to sell at a good enough price given a project's costs. And even if not, it doesn't seem accurate to call that a case of "poor performance" but rather, external factors.
