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Brilliant analysis. Thank you for your insightful words. In reality, there are very few economists who believe that a company should have 6 months of expenses
by trcollinson 6y ago
Brilliant analysis. Thank you for your insightful words.
In reality, there are very few economists who believe that a company should have 6 months of expenses in the bank for emergencies. I realize you are probably about to explain to me how those economists are wrong and companies are wasteful and whatnot. Frankly, they have their reasons and their reasons aren't do bad.
More importantly, most companies are not spending their money on frivolous things, like avocado toast. This isn't an HBO shocking sitcom/drama. Do companies make mistakes with their money, of course. But in my experience working with VC's, most companies are using all of their money on either marketing and sales, or R&D. Period. Maybe a bit on parties and morale but by percentage, 99% goes to sales and marketing or R&D. Large companies, on the other hand, spend their cash on all sorts of other things. Huge amounts of cash have still gone into sales and marketing, R&D, but also stock buy back, and investment.
- economicslol 6y agoWas the avocado toast bit above your head or are you just generally oblivious to sarcasm?
- dang 6y agoWould you please stop using HN for flamewar and ideological battle? It's tedious, predictable, and not what this site is for. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- thephyber 6y ago> there are very few economists who believe that a company should have 6 months of expenses in the bank for emergencies Economics is largely a study of game theory. When The Federal Reserve and Congress throw money at all companies, no matter the risk, doesn't this erode the future incentive for companies to be self-reliant and increase the expectation of similar monetary policy in the future? Also, I read your comment's parent as if it was on The Colbert Report, dripping with sarcasm.
- harryh 6y agoIt's not at all clear that we would want most companies to be self-reliant enough to weather a coronavirus level storm. That self reliance would come with a very high cost that probably isn't worth it.