8 ms·

Do you have any evidence supporting your "obvious" answer? Can you explain why investors have pumped $15 trillion into bonds with negative yields if there are s

Do you have any evidence supporting your "obvious" answer? Can you explain why investors have pumped $15 trillion into bonds with negative yields if there are so many good investment opportunities around?

dodobirdlord 7y ago
Because yield is only meaningful when considered in a context with risk, and many investing agents are risk averse enough to include a large amount of low-yield low-risk investments in their investment mixture.
- toomuchtodo 7y ago
  Ergo, the only investments left worth making (>0% yield) are high risk. Treasuries and “safe” bonds are close enough to 0 that I round down for the purpose of this comment. Apple has ~$250 billion in cash on hand. Berkshire Hathaway has $122 billion. Alphabet has ~$100 billion. Where do you invest when all that is left is the roulette table (sidenote: Alphabet should be making risky bets: Alpha Bet [Alpha is investment return above benchmark])?
  - dodobirdlord 7y ago
    Pretty much. Information availability has made the investing ecosystem efficient enough that pretty much anything worth doing gets funded, and it's hard to find unfunded things that are worth doing. Where do you invest in such a scenario? Well, in a broad mixture of structurally unrelated high-risk investments that have acceptable yield, with a fat anchor of very low risk, very low yield investments. Alphabet does make risky bets, they spin off new companies constantly, and on their last earnings report lost about $1 billion/quarter on it.
paulsutter 7y ago
What do you think happens to the money invested in bond offerings?
- deleted 7y ago
  [deleted]
- Retric 7y ago
  Well this is about companies borrowing money, so in this case returns to investors. Those investors then pay taxes in whatever country they reside in, and use a fraction of what remains to look for new investments. As the article points out, money is moving around but that’s it.
- deleted 7y ago
  [deleted]
celeritascelery 7y ago
Imagine what would happen if investors didn’t buy bonds?
deleted 7y ago
[deleted]

dodobirdlord 7y ago

Because yield is only meaningful when considered in a context with risk, and many investing agents are risk averse enough to include a large amount of low-yield low-risk investments in their investment mixture.

toomuchtodo 7y ago
Ergo, the only investments left worth making (>0% yield) are high risk. Treasuries and “safe” bonds are close enough to 0 that I round down for the purpose of this comment. Apple has ~$250 billion in cash on hand. Berkshire Hathaway has $122 billion. Alphabet has ~$100 billion. Where do you invest when all that is left is the roulette table (sidenote: Alphabet should be making risky bets: Alpha Bet [Alpha is investment return above benchmark])?
- dodobirdlord 7y ago
  Pretty much. Information availability has made the investing ecosystem efficient enough that pretty much anything worth doing gets funded, and it's hard to find unfunded things that are worth doing. Where do you invest in such a scenario? Well, in a broad mixture of structurally unrelated high-risk investments that have acceptable yield, with a fat anchor of very low risk, very low yield investments. Alphabet does make risky bets, they spin off new companies constantly, and on their last earnings report lost about $1 billion/quarter on it.

paulsutter 7y ago

What do you think happens to the money invested in bond offerings?

deleted 7y ago
[deleted]
Retric 7y ago
Well this is about companies borrowing money, so in this case returns to investors. Those investors then pay taxes in whatever country they reside in, and use a fraction of what remains to look for new investments. As the article points out, money is moving around but that’s it.
deleted 7y ago
[deleted]

celeritascelery 7y ago

Imagine what would happen if investors didn’t buy bonds?

deleted 7y ago

[deleted]