Watch and let us know if this could probably be the most important 30 minutes of your economic (101) life. “This simple but not simplistic video by Ray Dalio, Founder of Bridgewater Associates, shows the basic driving forces behind the economy, and explains why economic cycles occur.”
“An economy is simply the sum of the transactions that make it up. A transaction is a simple thing. Because there are a lot of them, the economy looks more complex than it really is. If instead of looking at it from the top down, we look at it from the transaction up, it is much easier to understand.”
“Private equity buys up assets at a bargain. It often targets assets that are in trouble and seeks to make them profitable. Private equity typically holds on to businesses before selling them or taking them public on the stock market. Private equity firms are generally paid, in Wall Street parlance, 2 and 20. That means it makes 2 percent of the money it manages. And it takes a 20 percent cut of the profits above a certain threshold.” (The New York Times)
The public company is one of capitalism’s greatest. Private-equity funds are another way of fixing misfiring firms. But activists have advantages over Wall Street’s buy-out barbarians. Instead of loading up on debt to finance the takeover of entire firms, they get the work done with a stake of, typically, just 5% or so. That means activists are good value because they use less debt, pay no takeover premium and extract far lower absolute fees (The Economist).
Inditex is a pioneer among “fast fashion” companies, which essentially imitate the latest fashions and speed their cheaper versions into stores. Every one of Inditex’s brands — Zara, Zara Home, Bershka, Massimo Dutti, Oysho, Stradivarius, Pull & Bear and Uterqüe — follow the Zara template: trendy and decently made but inexpensive products sold in beautiful, high-end-looking stores (The New York Times).