mcnees287's comments

mcnees287 | 13 years ago | on: Kim Dotcom: Joe Biden Ordered the Megaupload Shutdown

If you only hear one side of the story you can't make an informed decision. Fact is the entertainment industry lobby is well organized and able to have their voice heard. The general public is unorganized in this area and rather dispersed.

This is a classic case of concentrated benefits with dispersed cost. It's a messed up situation, but not corrupt.

mcnees287 | 13 years ago | on: JPMorgan Trading Loss May Reach $9 Billion

It also appears the JPM was nearly the entire market in the products they were trading. It will be extremely difficult to exit their position entirely. I suspect the real losses will be a good deal higher when it's all said and done.

mcnees287 | 13 years ago | on: Ask HN: Why Net 30? Why not pay immediately?

Some firms may have lumpy cashflows and are unable to put up all of the cash at one time for a purchase or they simply just may not wish to part with current cash holdings.

Often if a firm is willing (able) to pay upfront in cash they will receive a discount such as being required to pay only 0.8x, for example. The key point is that the true cost of the goods is in fact 0.8x. while x is the financed cost.

Net 30,15 and so on is a form of financing the purchase to the purchasing company. The rate that one must pay to get the goods today and pay in thirty or fifteen days should be compared to other forms of financing. A firm should consult a bank for instance to determine if they can finance the purchase at a lower rate.

mcnees287 | 14 years ago | on: 74.1% yield on 2-year Greek government bonds

Just because you default doesn't mean no one will lend to you in the future. Greek has defaulted many times in the recent past.

They will have to pay a much higher rate in the future. Making default expensive.

mcnees287 | 15 years ago | on: Google plays the yield curve

WIth $37 billion in cash currently they are bleeding money with negative real interest rates. It doesn't make much sense that Google is worried about inflation here. Also, consider that Google has about $17 billion in cash overseas to avoid US taxes and may not be able to deploy the full amount of funds at home.

Google may be altering their capital structure to include more debt which will do a few things, 1) lower to firms cost of funds and allow it to better operate in a lower interest rate environment. 2) Debt offers firms a tax shield, by putting out some debt,Google can lower its effective tax rate.

With interest rates at historic lows it makes sense to borrow as much as you can. We have negative real interest rates currently. If you borrow at a big economy like Google, paying back the debt will be much easier in this environment and the lenders stand to loose on a purchasing power basis.

mcnees287 | 15 years ago | on: Rule of 72

This is the correct way. The rule of 72 is only a rough approximation. Useful for quick calculations.

mcnees287 | 15 years ago | on: Sold my dipshit company for $5m, where to invest?

I have problems with your advice. 1. Treasuries are not tax free. 2. Technically the 10 year is a T-note.

3. This is not a risk free strategy. Interest rate risk is your biggest problem here. Although the Ladder will work in the current environment (interest rate anticipation), their is a good risk of higher inflation that could happen rather quickly. You will be screwed if your in fixed payment securities. The Bullet may be a better strategy here.

To the OP. I would never listen to investment advice on the internet. Finance is complicated and easy to mess up. That said, I would invest in some options in your position, if you choose to play the markets. Don't do this unless you know what your doing however. Also be careful with financial advisors. Some, but not all are the chiropractors of the finance world. The CFA designation is viable here.

You will probably be able to find better returns outside of financial markets, but it all depends.

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