The Celeri Journal #10: To Borrow or Not to Borrow

Written by Michael

On February 14, 2020

Global Markets Recap

There are four trillion-dollar companies in America, and they are all technology concerns and household names – Apple, Amazon, Google, Microsoft. Think about this for a moment: how many of us can make it through a single day without relying on a product of one of these titans – or at a minimum, one of their competitors.

We live in a Digital Age, and the rate of change will certainly only accelerate over time. There’s a concept called Moore’s Law that suggests the rate of change in semi-computing would be cut in half every 18 months in perpetuity; when the theory emerged in the late 1970s at the laboratories of Hewlett-Packard, critics scoffed at the notion those rates of change would be permissible forever without slowing down. Today, children play on iPhones that have at their disposal more computing power than the largest banks on Wall Street had in their collective databases only a generation or two ago.

Tesla today said it would tap debt markets to raise an additional $2 billion in cash even though CEO Elon Musk said “it didn’t make sense” because the company, in his estimation, doesn’t need the money.

Tech drives the global economy, and all the big tech companies have debt on their balance sheet. They know their rates of return blow away the carrying costs of the loans. Small businesses looking to grow should consider the world around them.

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