fiprofessor

But Berkshire Hathaway does do stock buybacks.

The earnings per share certainly increases. But this is (at least theoretically) offset by the fact that the firm's assets have decreased. For example, if the buyback was paid for with cash, then prior to the buyback, the shares represented a claim of ownership not just on future earnings, but also on that cash reserve.

That said, this is all under a theoretical model (as in Miller-Modigliani theorem). In practice/empirically, there is reason to plausibly believe that e.g. the decision to announce a buyback has a signalling effect and so can increase share prices.

No, because the future cash flow per share is not reflected in the current market cap.

Perhaps you are thinking of share price instead: there it is true that dividends reduce share price, while buybacks are share-price neutral at least theoretically, though it is commonly believed by many people that they do affect price.

(Hence, under that same theoretical model, market cap must decrease if share price remains the same because market cap is total number of outstanding shares * share price. So if the former decreases while the latter stays the same, market cap must have decreased.)

Who would invest in or create a company that would never pay a dividend and never bought back its stock? How would shareholders ever yield gains from their investment?

Short of some entity buying all stock and taking the company private (to then withdraw profits), there would be no way to return profits to shareholders.

The companies currently not doing those things are in a growth phase, with the expectation that in the future they probably will be issuing dividends/buybacks.

Prior to the Bush era tax cuts, all dividends were taxed at the income rate, which I think explains the biggest motivation in the shift from dividends to buybacks in that era.

Nowadays, as you say, there is no difference in tax rates for qualified dividends. However, one big remaining benefit of buybacks is that a dividend forces one to incur a taxable event when the dividend is issued, even if one chooses to immediately re-invest the dividend in the company (as many people still in the accumulation phase of investing do). On the other hand, a buyback does not force those people to sell.

On the other hand, a buyback should lower the market cap of a stock, so cap-weighted index funds ought to sell and re-balance when a buyback is issued, so most index investors would seemingly end up selling. However, they end up being able to avoid most of the capital gains taxes by re-balancing through redemptions and heartbeat trades.

I understand the cynicism, but the current text of the bill explicitly creates a separate trust which receives the revenue, and is restricted so that:

"The fund shall be used exclusively for the purposes of subsidizing the cost of higher education, early education and child care for lower-income and middle-class residents of the commonwealth."

https://malegislature.gov/Bills/193/H2824

Now, money is fungible so, just like with lottery revenues that are devoted to "education spending" in some states, it could be the case that it won't in fact increase net spending for the designated purpose, since what would have been spent on this purpose will end up being redirected.

On the other hand, the projected tax revenue is so large (>5% of Massachusetts's entire annual tax revenue), that I suspect it would end up being a net increase in funding for the stated purposes, even accounting for fungibility.

This seems like the same article, but without the need to subscribe to read the whole article: https://jacobin.com/2024/02/tax-ivy-league-endowments-public...

Based on the size of these “rainy-day funds” alone, the two universities, with a combined student body of 37,000, have enough wealth to rival Ghana, with a population of 35 million.

This is not correct at all, as the author is comparing a stock to a flow. The citation for this is a link to the World Bank's listing of GDP by nation. Ghana had a GDP in 2022 of $73 billion, but that is not Ghana's collective wealth.

Not a great start to an opinion piece on a huge tax policy proposal: the proposed projected figure of $2.5 billion would be the equivalent to 5% of Massachusetts's current annual tax revenues.

And if you look at any graph of college costs vs wages over the past 40 years or so, they have simply skyrocketed.

Absolutely, no debate there. The particular surprising claim in question though was about whether they have declined in the past couple of years, relative to a peak in late 2010s. And there, measured either in CPI adjusted costs, or relative to real median wages, they have.

But of course, the drops are small, and it's only been about 1-2 years. I'm not sure this really indicates a sustained trend, or just the fact that college cost increases have (for once) lagged inflation over those 1-2 years.

Point taken, but it's very common to adjust by CPI (or some other price index) when comparing prices over time.

All attempts to track prices over time have some flaw. But not adjusting for inflation in a chart that goes back ~20 years could also be perceived as misleading.

Moreover, we are starting to see growth in real median wages again. They are already above Q4 2019: https://fred.stlouisfed.org/series/LES1252881600Q. So I think it is fair to say in some sense that the real price of attendance has started to go down (albeit not that much).

Well, it's not worth it to bring this optimization to the attention of the CEO. But it definitely exceeds the engineer's weekly cost by a lot, so if it only takes a week, it's potentially worth it (modulo opportunity costs for other things to work on).

Spin it around: is it worth it for a sales person who makes $200k per year to spend a week to land a $50,000 per year contract? I think it potentially is, for the same reason, even if the organization as whole makes hundreds of millions of dollars a year.

Yes, but sometimes switching to arithmetic/absolute thinking is the right thing to do.

For example, suppose an engineer who is paid $200k per year can spend a week to implement an optimization that reduces costs by 0.1%. If that is 0.1% of something that costs $50 million per year, then that's not a bad use of time.

I think they will over time if PE deals start to implode or reveal themselves to be as bad as people claim. But the reaction will take a while to happen.

With partnership-based models, it's not necessarily the case that most of the doctors who owned their practices were necessarily that entrepreneurial. Many probably joined the practice and then became partners after a few years with buy-in and sweat equity. There's some risk and business management involved, but not the same as really doing your own thing. The path was laid out. (Kind of like lawyers at big law firms.)

The real entrepreneurs were the ones who initially founded a practice from scratch. But for some specialties where PE has taken hold, you need a group of people with enough capital to do that, negotiate contracts with hospitals for admitting privileges, wait-out a non-compete from a prior practice, etc. That takes time, and meanwhile, the net share of PE held firms may still increase for a while as other firms continue to sell out.

A PE takeover is the signal that you no longer need to hedge those shorts; the company, loaded with the debt used to purchase it, will soon go bankrupt, and you will be absolved of closing your short positions, for all practical purposes.

I think it's just the opposite: you'll be forced to close your short position when the PE company buys. When PE firms "take over" a public firm, they generally take it private, and the takeover involves buying all outstanding shares, typically at a premium over current share prices.

Honestly though, I think the good times are over for PE, as most of the industry (and finance in general) has been cushioned by a low interest rate world, and as debt starts to cost real money we're gonna see a _lot_ of these bets unwind.

Maybe the current bets will unwind, but I'm not sure that means there won't be a good time era of another round of bets. After all, interest rates were very high in the 80s, and that was a heyday for PE, right?

The gameplan is simple: lend your buddy the money to buy the business. Now you have a line to the person who has the most access to data about, if not control over, the direction of the business. Wherever it happens to go, you can be ahead of the market. Long if it's going to survive and grow; short if it's doomed. He's happy because the decision to be lenient or aggressive about repayment lies with his own contact - you.

But if the business is privately held (because the borrower used the loan to buy the business), then what market is the lender going long/short against in this hypothetical conspiracy? Other (public) businesses in the market? Potential investors when the PE firm sells and takes the business public?

And then she was with Devon Welsh, a singer/songwriter whose father was an actor. And most famously has been the partner of Elon Musk. She's had probably a larger share of carefree living than most.

No doubt she's had a good life, but Devon Welsh was himself basically a nobody when they dated, and she was already extremely successful as an artist by the time she became Elon's partner.

It's just strange of the author to pick someone who had already released two studio albums during her time as a student at McGill as a supposed example of someone being able to succeed because their parents paid their bills for an interminable amount of time. This is after a paragraph where the author said:

Who paid for all this time? How does someone outside of a conservatory program have the time to compose, record, and perform new original material every month, let alone to even practice their instrument an hour a day? The answer almost always comes down to the ability to not have to worry about paid work while pursuing your craft. As in, most likely, someone in your family pays your rent.

The answer, in the case of Grimes, is she was a college student, probably neglecting her studies a bit, being supported the way many college students or even people in conservatories are.

Nice essay, but some of the contemporary examples in this paragraph about the independenlty wealthy are not really that compelling:

I’m not saying wealthy people can’t make incredible artists. Without Marcel Duchamp’s monthly allowance from his father throughout his adult life, we would never have Dada. Giacinto Scelsi was literally the heir and Duke of La Spezia castle estate. Something more contemporary? Grimes’ mother was a Crown Prosecutor, the Canadian equivalent of a District Attorney, in Vancouver. Frankie Cosmos’ dad is the guy from Wild Wild West, no, not Will Smith, the other guy. Julian Casablancas’ father ran New York’s top super modeling agency while young Julian hung out at the kid’s table with Ivanka Trump at Christmas time. The list goes on.

The argument is supposed to be that these kids didn't have to worry about paying the rent, so they were able to devote more time to their craft. But I don't think some of the contemporary examples listed were necessarily like that.

Take Grimes -- a Crown Prosecutor is a public servant, so you can look up their average pay ranges: https://www2.gov.bc.ca/gov/content/careers-myhr/all-employee... . That's definitely a solid middle class life, but not exactly generational wealth. Now, compared to a poor kid who has to take on jobs in high school to support their family, I'm sure she had more time and less stress in her teenage years which let her practice more, but there are lots and lots of middle class children who have that level of free time which they devote to all sorts of extracurriculars.

Moreover, Grimes, Casablancas, and Cosmos blew up when they were in their very early 20s: Cosmos released her debut studio album at 20, Grimes at 22, Casablancas at 23. So, despite any family wealth they may have had, it's not like they spent years and years of their adult lives living off their parents' support, or at least not any more so than hundreds of thousands of college students do every year. Of course, they had it easier than kids who cannot even afford to go to college, or who are working 20 hours a week to pay their way, but I'm not sure it's at all comparable to Duchamp or Scelsi.

Maybe there's an argument that social connections helped them to get their record deals, but the argument presented doesn't seem to apply.

Even though Meta doesn't issue dividends, they did do massive share buybacks last year. That effectively returns cash on hand to investors, much as dividends do. (Of course, Meta's buybacks are also to offset stock based compensation, but on net, it still represents a return of cash to investors.)

That makes sense to me. But, in light of that, the ones who do go to Jane Street are relatively more likely to be interested in their tech stack and OCaml, as opposed to wanting to "test themselves" in the "adversarial setting" that the post I quoted describes. In contrast, the couple of people I know who went to HRT or Jump Street are much more like that description. They deliberately targeted HFT work, whereas Jane Street has more people who "fell into it" because of this outside interest.

I mean, Yaron used to go around a lot and give guest lectures about OCaml programming "in industry" at all sorts of functional programming courses in universities. I have to imagine they thereby recruited people who would have never considered HFT shops otherwise.

I think people go to high-technology finance because they want to test themselves against a harder class of problem in a more adversarial setting against people who feel the same.

Maybe this is so at other finance firms, but my experience with developers who go to Jane Street is quite different. Because Jane Street heavily advertises OCaml as part of its recruiting strategy, I know many people who ended up there just because they wanted to program in OCaml while still getting FAANG comparable salaries. They don't care at all about finance (at least initially, maybe it becomes an acquired taste for some).

It's wildly inaccurate to say that much of Alzheimer's research has been shown to be fabricated. The article you link to is about one person's work. Even though he is a very influential researcher, there must be at least thousands of people doing research on Alzheimer's disease, if not more.

It might better to link to directly to the FTC press release (https://www.ftc.gov/news-events/news/press-releases/2022/08/...) instead of the FTC "Consumer Alert" that is currently linked at the time I post this comment. The "Consumer Alert" is written at a bit of a simplified level, and I think this audience might benefit from the more precise statement of the alleged issue that is in the press release.

Should auto-manufacturers be liable for emissions produced by cars that have had their catalytic converters stolen?

Should medicine manufacturers be liable if someone circumvents their tamper-proof seals and laces them with a poison?

Should berry growers be liable if someone inserts needles into foods that are sold at supermarkets?

All of these are crimes that are either widespread or famous from media scares that happened in the past, and thus foreseeable going ahead, but I think liability would still be limited because the resulting harms are caused by a 3rd party criminal act.

But very few physical consumer goods are designed to be robust to adversarial or malicious use, and there is no standard of liability for such failures. On the other hand, often in these discussions, people advocate for such a standard for software products.

Consider the example of a music player that was mentioned in another comment upstream in this thread. Suppose a company sells music player software that turns out to have a RCE vulnerability when run on a maliciously crafted .mp3 file. Should they be liable?

It's helpful to consider a physical product analogy: imagine the company sold a cassette player instead. Now, let's say that someone designs a malicious tape that is lined with noxious chemicals, which when played in the cassette player causes it to catch on fire and explode. Would anyone regard the cassette maker as liable if this caused someone to die or a house to burn down?

In the Escola v. Coca-Cola Bottling Co. case that you cite, a key phrase from the majority opinion is:

Upon an examination of the record, the evidence appears sufficient to support a reasonable inference that the bottle here involved was not damaged by any extraneous force after delivery to the restaurant by defendant.

In other words, there was no 3rd party malicious use or manipulation of the bottle: it exploded during "normal" use. If the bottle had exploded because some 3rd party had deliberately weakened the bottle, or added extra pressure before giving it to the waitress, there's no way Coca-Cola would have been liable.

Yes, I agree that it's the fine distinctions at the upper end that are hard to make. But if we're going to eliminate 50% of the proposals, is that really going to reduce the amount of time people spend on them? It might reduce reviewer time (which would certainly be welcome!), but I'm not so sure it reduces the submitter's time.

It comes down to whether the large amount of time spent is from people polishing and re-submitting stuff that's good but not "great", or whether it comes from the initial stages of getting something to that good quality to start. In my experience, it's the latter. And if that's typical, then I don't see how the lottery helps.

Do people really find the thing mentioned in the last paragraph that ironic? To be honest, I do not (except, maybe, if the scientists are economists who work in industrial organization, or something). Many natural scientists I know are deeply skeptical of our ability to accrue this kind of subtle knowledge about complex human processes and social organizations through experiments...

I see a lot of appeals to "fund people, not projects", but the main issue I have with it is that I think it strongly biases people to select "super stars" who have impressive credentials / come from high status organizations. Of course, there's already a lot of "rich get richer" effects in science, as the article points out, but I think it would be nice to try to shift away from those things, not increase them. (Besides, isn't the resounding message in academia these days supposed to be that assessing people is full of biases that we ought to avoid? Of course you always assess the people behind a grant application to some extent, but focusing on the project would seem to be better in terms of avoiding these biases.)

The other alternative of "funding lotteries" is more suspect. As the article summarizes, the argument for lotteries is:

Advocates of lotteries make two key critiques: a) the current system forces researchers to spend a lot of time preparing grants; and b) peer reviewers cannot reliably identify “good” grant applications. They claim that a lottery system would reduce the time spent on review (because reviewers would mostly skim the proposals to check for minimal scientific robustness) as well as the time spent on preparing proposals (because there would be less of an incentive to meticulously craft proposals, given that no matter how detailed and well written they are, they are going to be chosen at random).

Of course (a) is true, but as the article suggests, the evidence for (b) is a bit shaky. Moreover, we should have strong priors against (b). To be sure, reviewing is not perfect, far from it! But, scientists must at some level be able to judge the future prospects of work, or else they wouldn't be able to make any fruitful decisions about what research to conduct. So the primary plausible way I see that (b) could perhaps be true for a given pool of applications is if all of the ones in the pool pass some thresh-hold bar for quality that makes it hard to further distinguish between them. It's not clear to me that that quality level would be maintained if we move to a lottery.

Great story. Reminds me of the book and movie October Sky, in which the protagonists, who are high school students, strive to learn calculus so that they can learn how to better build rockets.

Amusing, but MDPI is a semi-predatory publisher: https://paolocrosetto.wordpress.com/2021/04/12/is-mdpi-a-pre...

A common tactic is to have tons of "special issues" that pump out a lot of articles. This particular journal, Animals, engages in this: https://www.mdpi.com/journal/animals/sections

Even the two articles that the essay cites from the NYT and New York Post, once you get past the headlines, go on at length about how these things were risky and volatile, or even downright scams. Almost every article about cryptocurrency in these traditional venues tends to have at least one paragraph where they will describe cryptocurrency skepticism.

Now it could be that people started to treat these as a kind of pro forma disclaimer, like the small text about "past results are not guarantees of future returns" that you see with traditional investments. But the warning was there.