ttt333

Is it just me or does this seem to be directly pasted out of an LLM

Banks provide a service to the economy of connecting people with more money than needed right now (savings) to people with less money than needed right now (loans). They make money in between when this goes well. So I would contend the shifting of numbers around actually does provide a good to the economy

I have no idea if technology like this will prove to be scalable, economically competitive, or even practical… but it does seem pretty dang cool as a concept

Yes. I've tried using it for pretty straightforward time series forecasts, and I struggled to make it into something useful in a business context.

I'll disclaim that I'm just a finance dude and not a data scientist or programmer. But the documentation leads me to believe that I am in the target audience. I felt like I could grasp the basic mechanics after reading the paper, but I wish the documentation could help someone like me be more intelligent with the 'tuning' of the model. I could never get accuracy below 15% average error, which is too large for my use case.

Probably user ignorance, but that's my experience.

I've been surprised at how little adoption of the Python data / viz toolkit gets picked up in finance settings, when it seems like such a natural fit, so I wrote this post to help unpack it.

Curious what y'all have seen in your experience.

Short term treasuries are definitely pretty common on the asset side, but if you refuse to honor withdrawals on demand deposits you won't have a bank anymore and the FDIC will step in to wind things down

Yeah that's true, it matter more for net-interest-margin / interest income generation in a rising-rate environment. Good point

respectfully, I'm not so sure. The decline in bonds applies to all fixed-rate securities. The only alternatives would have been just straight up cash (bad with inflation) or riskier, less-liquid assets (non-tradable loans with floating rates, for example). They are limited on the latter by risk weighting, and I'm not sure having looser risk controls on the asset side would really help confidence in the banking sector.

please feel free to disagree!

Fair question. My answer would be... kinda.

The cash available on an ongoing basis to be re-invested or returned to investors is what you might call levered free cash flow [0], which I think is what you are referring to.

My comment about "available" cash is more like available for big one-time investments like a big acquisition, a special dividend, or something like that.

[0]: https://www.investopedia.com/ask/answers/111714/whats-differ...

Could you clarify what you mean about the dollar in your pocket worth more than debt at 3% interest?

In corporate finance net cash or net debt is indeed standard practice (cash on balance sheet less debt on balance sheet). It sort of helps understand how much cash is ‘available’ to give back to investors, or pay down debt, spend on R&D, etc.

Now since most of MSFT’s long term debt matures in 2027 or after, you could argue that there is not much cash need for debt repayments in the near term. On the other hand, cash flow from operations was down year over year in their last reported quarter so belt tightening is probably needed to reverse that trend.

Not related, but your place sounds beautiful

> "You can’t use rental income when calculating your debt to income ratio."

Do you have a source for this claim? Based on personal friends who work in the lending / single family rental home space, I don't think that's correct. [0] [1]

[0]: https://www.valuepenguin.com/mortgages/claiming-rental-incom...

[1]: https://selling-guide.fanniemae.com/Selling-Guide/Originatio...

The terminal point doesn't necessarily have to apply for the company, or even the financial asset based on the company.

There is an simple model in finance [1] that collapses an infinitely growing stream of cash flows into a finite present value. So to your example of coca-cola, even if you assume they will exist and distribute growing profits forever, you can still find a terminal value.

[1]: https://corporatefinanceinstitute.com/resources/knowledge/va...

Formerly worked in Investment banking: it is a huge huge determinant of value.

Particularly for a lower-dividend, higher growth company like Nvidia, the vast majority of the present value comes from the terminal value (what someone else will pay you for it when you're done holding the investment), made even more extreme by low interest rates.

Within the subset of certified, normal category piston aircraft, you will find one of these two on a sizable proportion of those airplanes.

[1] https://en.wikipedia.org/wiki/Lycoming_O-360

[2] https://en.wikipedia.org/wiki/Continental_IO-550

To my knowledge some ultralights use regular unleaded (called MOGAS in some aviation contexts) and of course anything that you can buy an airline ticket for outside of perhaps Alaska will use jet fuel.

If you consider "add to quality of life" a synonym for marginal utility I think you may be in agreement.

Yes, $10 buys the same Mcdonald's lunch regardless of how much money one has, but two people, one with $0 and one with $1bn in net worth will be excited about that lunch to very different degrees.

Kinda. In a normal IPO the big banks will agree to underwrite (that is, buy from the company and then immediately sell to investors) all the shares at an initial "offering price", and this is agreed upon in writing a little bit before the launch day. I don't believe this happens in the direct listing format, it just starts floating with no underwriting process.

So there is a difference in structure, but to your point immediately after launch it does not really matter to the general investing public

Why don't we discuss corporate income taxes as effectively a fee for the legal and commercial advantages associated with being a corporate entity in the US?

For example a C corporation can tap into highly liquid and well developed capital markets, limit and separate the owners and lenders to a business from management and associated liability beyond their initial investment, and thanks to certain legal decisions like Citizens United, corporations still seem to enjoy what seem to me more like personal rights such as freedom of speech, ability to participate in politics anonymously , and likely more I don't know about.

With all the aforementioned advantages, is it any wonder that a huge proportion of firms above a certain size limit are C corporations despite the obvious downside to contend with of double taxation? [1]

It seems like the relevant question is the value of those advantages to the tax rate legislated by congress, net of costs related to the right accounting, legal, and lobbying teams.

[1]: https://fas.org/sgp/crs/misc/R44086.pdf (page 7 and 8)