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> Ya, that's finance 101. But here's Finance 5400: And another point: you have to imagine that the richest companies in the world have the best possible financ
by Skunkleton 7y ago
> Ya, that's finance 101. But here's Finance 5400:
And another point: you have to imagine that the richest companies in the world have the best possible financial expertise on staff. It is safe to assume they know what they are doing.
- whatshisface 7y agoThe goals of extremely ABC-heavy portfolios (i.e. those of its founders and top executives) probably involve a lot less volatility for ABC than diversified external investors would want to see.
- MegaButts 7y agoWhile I think you're probably right, a blanket assumption that "they're smarter therefore they know best" is why everyone was so surprised by what happened to Enron. I do not think this is the case with Alphabet, just saying you shouldn't blindly trust experts. There's also the subprime mortgages issue from just over 10 years ago which is much better understood now, but at the time people didn't understand them and just assumed the experts were right.
- nostromo 7y agoAnd Bear Stearns, and Washington Mutual, and Deutsche Bank, and AIG, etc., etc. "It is safe to assume they know what they are doing" because they're managing a ton of money has been proven wrong over and over again.
- dahfizz 7y agoNobody is claiming that money managers have omniscience. What they do certainly have is more information and expertise than a random internet commenter. They don't know everything, but it's safe to assume they know more than you.
- TheGRS 7y agoWell the actual decision-making tends to be more important than just what one knows. A pile of cash seems more indicative of investment paralysis than some grander strategy. Like, "we can't figure out the best investment to make with this money, so the safest thing we can do is hoard it until we come up with a better idea".
- i_cant_speel 7y agoAt the end of the day look where the major banks ended up after the crisis. Mostly unchanged. They knew what they were doing. It's just that what they were doing wasn't in the public's interest.
- awad 7y agoBetter than unchanged, even. Sure, some lost and were scooped up, but by and large the financial sector is even stronger than before with all of the consolidation that's happened.