Hi Denni, RE: "amy, i guess you have never used margin. ?"
Never. I have very strong opinions about this (like most of my opinions). I don't have parents that can simply bail me out if I were to run into problems, so I am incredibly financially paranoid, to say the least. I have never borrowed money.
This is a side note, but in fact, one of the reasons why I like doing a startup is that I am in complete control of my financial destiny and feel much more secure with this: at a large company you have one manager that cuts your check and you have to trust the folks at the top (to take risk, to make the right decisions, etc.); at a startup, risk is spread out among many customers that are all paying you.
Can you imagine working for an auto company back in the 80's and trusting certain auto executives to make the right decisions? My Dad did. I would never do what he did - way too risky to work for a large American company whose executives aren't willing to take risks. Startups take risk. Not taking risk is absolutely the most dangerous thing a company can do. (In fact, one of the reasons why I like investing in Intel is that Intel likes to take a lot of risks and Barrett has successfully studied Japanese businesses and has proven to be very successful and trustworthy in this regards. This means a lot, given what I've painfully seen happen to American auto companies in the mid-80's).
If an auto executive from the 80's was managing Intel, maybe Intel would still be only a desktop PC company, not a network company, not a Server company. That's how I view it. I invest in companies that take risk - those that don't are the most dangerous thing and I avoid them.
Back to your comment about margins, some of my contacts have 'Silicon Valley size mortgages' that are in a way, rather similar in concept to a leveraged margin. A mortgage is sort of like margin - it's borrowed, leveraged money. Silicon Valley is a stock option economy. When the valuation of stock options falter, the mortgages can get 'called.' Lots of folks, who don't use margin, are betting that their stock options (Cisco, Sun, Intel, etc.) will pay for mortgage payments. This is risky in this market. Better to sit on the stock options or cash out.
RE: "enjoy the ride. "
I heard two more not-so-good stories this weekend. The stories keep coming in. That's not enjoyable.
Regards,
Amy J |
