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> Everywhere you look, the economic indicators are solid. Sure, if you cherry pick the indicators. There's a pretty big one you're tiptoeing around: the Fed Fu

> Everywhere you look, the economic indicators are solid. Sure, if you cherry pick the indicators. There's a pretty big one you're tiptoeing around: the Fed Funds Rate has gone from 0.25 in 2022 to 4.75. > I do not have insight into Gitlab's customers, or the current state of Gitlab's business. Well, that is to your detriment, both as a persuader and decision maker. Gitlab is publicly traded, and their fiscal year ended Jan 31, so you have a wealth of data you could be consulting to make the case. Yahoo Finance shows[1] they have zero debt, and margins at negative fifty percent -- for every dollar take in they lose a dollar fifty. It's not too hard to imagine the company has been losing money while money was cheap to grow marketshare versus GitHub, but now that rates are up it will be much harder to issue debt and pay it back. It's not to hard to paint Gitlab as a company in transition from loss leader to profitability by cutting costs and reducing long term investments as they become more expensive. And I think describing that as a response to macroenvironment conditions is appropriate. [1]: https://finance.yahoo.com/quote/GTLB/key-statistics?p=GTLB https://finance.yahoo.com/quote/GTLB/key-statistics?p=GTLB

ryanisnan 4y ago
Thanks for that. I'm curious if you have any resources you would recommend for improving one's literacy for corporate finance?
- jldugger 4y ago
  Investopedia? I don't have any advice here, but The Personal MBA[1] is a reading list, and their pick "How to Read a Financial Report: Wringing Vital Signs Out of the Numbers"[2] doesn't sound like the worst. But I haven't read it, so don't mistake this for a personal endorsement. [1]: https://personalmba.com/best-business-books/ https://personalmba.com/best-business-books/ [2]: https://www.amazon.com/dp/1118735846/ https://www.amazon.com/dp/1118735846/
SantalBlush 4y ago
>Sure, if you cherry pick the indicators. There's a pretty big one you're tiptoeing around: the Fed Funds Rate has gone from 0.25 in 2022 to 4.75 Talk about cherry picking indicators—the federal funds rate isn't even an indicator. If you sincerely want to look at the data without cherry picking, please look at the top 10 US macro indicators [0]. [0] https://www.investopedia.com/articles/personal-finance/020215/top-ten-us-economic-indicators.asp https://www.investopedia.com/articles/personal-finance/02021...
- jldugger 4y ago
  Okay, you wanna look at SOFR instead? It shows the same thing but is an actual measure of economic activity instead of policy goals: > The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. [1]: https://www.newyorkfed.org/markets/reference-rates/sofr https://www.newyorkfed.org/markets/reference-rates/sofr
  - SantalBlush 4y ago
    >Okay, you wanna look at SOFR instead? Why would I want to look at the SOFR? That's the epitome of cherry-picked data. I just sent you a list of common economic indicators, and you're willfully avoiding them, which doesn't bode well for your argument. If anything, you should be referencing the yield curve, which is an actual economic indicator and has recently inverted. That would illustrate your point much better.
    - jldugger 4y ago
      > Why would I want to look at the SOFR? I'm asking what your preferred metric for interest rates is. Apparently you want to look at the yield curve slope? Which is fine, and commonly used as a leading indicator of recessions. But in a way its about the market predicting a change in the future value of money, rather than economic conditions right now. Sort of a second order effect, and IDK any timeseries that captures it that I can compare now versus last year with. > I just sent you a list of common economic indicators, and you're willfully avoiding them, which doesn't bode well for your argument You sent one random top ten listicle from investopedia. How do housing starts matter as a macroeconomic signal for a tech startup selling services to other tech companies? It won't, these are proxies for the larger economy. And it wont ever matter to them. Interest rate is the macro indicator that most directly affects such companies, so thats the one I'm discussing. Other conditions exist, like every tech company undergoing layoffs and cost cuts is a factor but not usually treated as "macro." It's definitely a factor, and one worth reflecting on. But we're not trying to forecast global GDP here, so when an exec says 'macroeconomic conditions' think capital markets not rental vacancy rate.

ryanisnan 4y ago

Thanks for that. I'm curious if you have any resources you would recommend for improving one's literacy for corporate finance?

jldugger 4y ago
Investopedia? I don't have any advice here, but The Personal MBA[1] is a reading list, and their pick "How to Read a Financial Report: Wringing Vital Signs Out of the Numbers"[2] doesn't sound like the worst. But I haven't read it, so don't mistake this for a personal endorsement. [1]: https://personalmba.com/best-business-books/ https://personalmba.com/best-business-books/ [2]: https://www.amazon.com/dp/1118735846/ https://www.amazon.com/dp/1118735846/

SantalBlush 4y ago

>Sure, if you cherry pick the indicators. There's a pretty big one you're tiptoeing around: the Fed Funds Rate has gone from 0.25 in 2022 to 4.75 Talk about cherry picking indicators—the federal funds rate isn't even an indicator. If you sincerely want to look at the data without cherry picking, please look at the top 10 US macro indicators [0]. [0] https://www.investopedia.com/articles/personal-finance/020215/top-ten-us-economic-indicators.asp https://www.investopedia.com/articles/personal-finance/02021...

jldugger 4y ago
Okay, you wanna look at SOFR instead? It shows the same thing but is an actual measure of economic activity instead of policy goals: > The Secured Overnight Financing Rate (SOFR) is a broad measure of the cost of borrowing cash overnight collateralized by Treasury securities. [1]: https://www.newyorkfed.org/markets/reference-rates/sofr https://www.newyorkfed.org/markets/reference-rates/sofr
- SantalBlush 4y ago
  >Okay, you wanna look at SOFR instead? Why would I want to look at the SOFR? That's the epitome of cherry-picked data. I just sent you a list of common economic indicators, and you're willfully avoiding them, which doesn't bode well for your argument. If anything, you should be referencing the yield curve, which is an actual economic indicator and has recently inverted. That would illustrate your point much better.
  - jldugger 4y ago
    > Why would I want to look at the SOFR? I'm asking what your preferred metric for interest rates is. Apparently you want to look at the yield curve slope? Which is fine, and commonly used as a leading indicator of recessions. But in a way its about the market predicting a change in the future value of money, rather than economic conditions right now. Sort of a second order effect, and IDK any timeseries that captures it that I can compare now versus last year with. > I just sent you a list of common economic indicators, and you're willfully avoiding them, which doesn't bode well for your argument You sent one random top ten listicle from investopedia. How do housing starts matter as a macroeconomic signal for a tech startup selling services to other tech companies? It won't, these are proxies for the larger economy. And it wont ever matter to them. Interest rate is the macro indicator that most directly affects such companies, so thats the one I'm discussing. Other conditions exist, like every tech company undergoing layoffs and cost cuts is a factor but not usually treated as "macro." It's definitely a factor, and one worth reflecting on. But we're not trying to forecast global GDP here, so when an exec says 'macroeconomic conditions' think capital markets not rental vacancy rate.