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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
by 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 agoErgo, 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 agoPretty 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.