Re:Debunking “America has become so anti-innovation – it's e...
by ThomPete on Friday May 19, 2017 @11:35AM
(#14376678)
That industrywide, the individual companies will soon find out if the overinvested or not.
Re:Debunking “America has become so anti-innovation – it's e...
by pixl97 on Friday May 19, 2017 @12:09PM
(#14377025)
The old saying "The market can remain irrational longer than you can remain solvent" always applies.
It really doesn't matter if you are a responsible company that takes on low/no debt if a significant number of your competitors take on debt, and their investors allow it. "Soon" is highly overrated. Amazon is going to make lots of money 'soon' unless they are wrong about future market conditions, yet their investors have given them a pass at reinvesting most of their money for growth. Entire industries can commit irrational actions for long periods of time and have plenty of analyst attempt to rationalize the situation.
Then again the Great Retail Apocalypse of 2017 may lead to to think otherwise. US retail is massively overbuild, most of that because the companies are allowed to take on tens or hundreds of millions of debt. This debt acts as a buffer "It's only bad now, it will be better soon, we promise". By the time feedback signals give a clear message that the investment will never be repaid investors are overextended and losses occur.