News for hackers. Stuff that matters.

A comment on Was corporate profit growth a bubble inflated by "financial engineering"?. Parent comment

Re:Was corporate profit growth a bubble inflated by "financi... by Enginerrrd on Friday March 27, 2020 @02:20PM (#22705328)
My guess is that the answer to that is cheap debt from the fed keeping interest rates so low for so long. The stocks had value beyond what you'd expect from P/E ratiosand assets alone because there was added future value in the form of anticipated stock buy backs.
[ Parent | on HN ]
Re:Was corporate profit growth a bubble inflated by "financi... by JackFr on Friday March 27, 2020 @02:28PM (#22705411)
If debt is that cheap it would be irresponsible to finance the firm with equity.
[ Parent | on HN ]
Re:Was corporate profit growth a bubble inflated by "financi... by Enginerrrd on Monday March 30, 2020 @03:04PM (#22731146)
That really depends on your timelines and risk tolerance assessment including externalities.

To use poker as an analogy: if you aren't sufficiently bankrolled, the correct play (most positive EV) can involve an unacceptably high risk of ruin. ....and BTW are you also factoring in the probability of fraud or a government seizure in your calculations?

[ Parent | on HN ]
Re:Was corporate profit growth a bubble inflated by "financi... by adwn on Friday March 27, 2020 @03:06PM (#22705801)
> If debt is that cheap it would be irresponsible to finance the firm with equity.

Why?

[ Parent | on HN ]