

Changing How I Think About Finance - kevin_morrill
http://refer.ly/the-price-is-right/c/3a1f96026a1a11e2bfbf22000a1db8fa

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SeanDav
As a veteran of the finance industry, I can safely say that the industry does
make a real contribution to society, however there is a "but" here. It is also
full of ruthless, greedy, narcissistic, over-paid and dangerously short-
sighted individuals.

~~~
phaemon
Or, perhaps, as a veteran of the finance industry, you're a ruthless, greedy,
narcissistic, over-paid and dangerously short-sighted individual who would
like us to believe the industry makes a real contribution to society.

Or maybe not. How should we tell?

~~~
SkyMarshal
It's not that hard. Most of finance is about the efficient allocation of
capital, and to this point in history our model has worked better than any
other.

It's not without its problems, namely the boom/bust cycle and propensity for
fraud and periodic crises, but there are known solutions to those, if
difficult to implement sometimes, especially when governments and regulators
are captured to some degree or another.

But to say that finance makes a contribution to society is not false.

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jmduke
I think it's somewhat disingenuous to say that Milken's great insight was
discovering that junk bonds weren't risky: rather, his insight was that there
was a profitable inefficiency in the gap between the risk-offset price in junk
bonds and the yield of such bonds.

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tptacek
It seems like there's been a concerted effort to "rehabilitate" Milken, or
even build a narrative that he was set up as a fall guy in the '80s. But
_Predator's Ball_ and _Den Of Thieves_ tell a pretty detailed story about what
was happening in the leveraged financing practices at the time.

~~~
tedunangst
I think it's more that, with the passage of time, people can step back and
take a more balanced look. Good ideas are still good ideas, even when bad
people have them. Babies and bathwater and all that.

~~~
wglb
He certainly did have some good ideas. However, it is not clear how the
insider trading part of what he did is going to stick in the bath with the
baby.

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svmegatron
This is an incredible use of the referly platform - interesting idea with a
cool article, and then several affiliate links to books on the same subject.

+1 great execution of this business model

~~~
dmor
Thank you for being so supportive, I've been in massive redesign mode for the
past 6 weeks with all the content creation tools and layout and this made my
day. Blog post about the shift in our thinking is on the way

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martin_bech
Just regarding the note on Apple cash.. Its 137.1 billion usd in cash.. Not 10
billion.

Source: [http://m.techcrunch.com/2013/01/23/apple-now-has-many-
billio...](http://m.techcrunch.com/2013/01/23/apple-now-has-many-billions-in-
cash-more-than-hps-annual-revenue-and-vietnams-gdp/)

~~~
kevin_morrill
I must be misinterpreting
[http://finance.yahoo.com/q/bs?s=AAPL+Balance+Sheet&annua...](http://finance.yahoo.com/q/bs?s=AAPL+Balance+Sheet&annual)
Would love it if someone can chime in with the right way to read that kind of
statement to arrive at the number the way TechCrunch is reporting it.

Presumably, I am misquoting the number for Exxon too
([http://finance.yahoo.com/q/bs?s=XOM+Balance+Sheet&annual](http://finance.yahoo.com/q/bs?s=XOM+Balance+Sheet&annual)).
I fixed the Apple figure in my post.

~~~
rjtavares
You are not counting Apple's short and long term investments. If you read the
Notes to the Financial Statements[1] (the most important piece in accounting),
you can see the breakdown of all the cash and securities owned by Apple,
including 20M Treasury and 47M Corporate bonds.

[1] [http://yahoo.brand.edgar-
online.com/displayfilinginfo.aspx?F...](http://yahoo.brand.edgar-
online.com/displayfilinginfo.aspx?FilingID=8888271-212228-307222&type=sect&dcn=0001193125-12-444068)

~~~
kevin_morrill
Okay, now I am thinking I was counting it correctly for the context of my
post. The $10B in cash is sitting idle. If it's in short and long term
investments, that it's being put to some kind of use.

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rayiner
I love the idea of suggesting books to get people familiar with an industry
they probably don't know a lot about. I think people jump to conclusions about
Wall Street being useless based on not really understanding what Wall Street
does. Think about it: if Wall Street were useless, would anyone care whether
it was working properly or not? It is precisely because it is useful that we
care about it running well and correctly.

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johnrgrace
The biggest insight Milken was that you could create junk bonds. Lookign back
this seems trivial, but no one else had thought of doing this. Junk bonds used
to be the so called "fallen angel", bonds issued by highly rated credit
companie sthat later were downgraded. All of the bonds trading in the market
were bonds that lost their rating. The big idea was that companies with poor
credit could issue bonds, which no one had realized yet.

    
    
      This opened up a lot of capital to firm, some of which were startup in nature, that previously couldn't get capital.  This drove real economic growth that built real things.

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the_watcher
Michael Lewis was an investment banker, but was based out of London, not Wall
Street. He only did training in New York, per Liar's Poker.

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kkwok
Any reading list on Milken should include Den of Thieves.

