"When the people find that they can vote themselves money, that will herald the end of the republic".
- Ben Franklin
Alphabet Inc. is a pseudo-diversified (all-tech) holding-company with subsidiaries in several fields. The focus on tech reduces Alphabets diversification but increases the likelihood businesses can work together. Strategic partnerships are far easier in a holding company, where it is not uncommon for resources to be shared.
For example, If Google Capital had a significant breakthrough in machine learning, not only would their company be successful; but the new machine learning knowledge would improve operations at other Alphabet subsidiaries too.
List of Alphabet Subsidiaries
Youtube - The popular video service was acquired in 2006, significant source of traffic for Ads.
Search - Google's search feature was the original website.
Android - Google's mobile operating system was released in the 2008.
Maps - A similar project to Google Earth, brings traffic Ads.
Apps - Integrate Googles "free" online apps into your business. Apps include Gmail, Google ____ Docs, Sheets, Slides, Calendar, Hangouts, Drive, and Vault.
Ads - The most profitable service offered by Google. Ads will be an invaluable resource to Alphabet while they continue growing their network.
Google Ventures - Any-stage venture capital firm focused on startups in technology, software, research & development, biotechnology, transportation, cyber security, and agriculture.
Google Capital - Late-stage venture capital firm in big data, financial tech, and machine learning.
Google X - Research and Development operations focusing on artificial intelligence, computational neuroscience, healthcare, and biotechnology.
Jigsaw - Technology incubator analyzing and solving global challenges.
Verily Life Sciences - Healthcare, biotechnology, and life science.
Calico LLC - Health care and biotechnology.
Google Fiber - Communications: internet, cable TV, and phone.
Sidewalk Labs - Urban development, infrastructure. "Build a city from the internet up."
Nest - Home automation software/hardware and integration.
Stackdriver - Cloud computing management services.
Vevo - Online music streaming service.
VirusTotal - Anti-virus software that analyzes software and URLs for viruses.
FireBase - Cloud services provider for business developers.
In September of 2016, the number of products Alphabet offers is incomprehensible.
Google was founded in 1998 by Stanford grads Sergey Brin and Larry Page. Their business plan was to create an online search engine, but there were already a number of services available online.
Many of the search engines in the late 90's compiled their results by testing the relevance of keywords against related website data. Google ranked their search results based on the number/quality of links to other sites. This laid the basis for much of modern online marketing.
In October 2015, Google Inc underwent significant structural changes. As a result of growth (and in large part due to their Mergers and Acquisitions) the "Google Family" became a holding company called Alphabet.
Alphabet's corporate changes have little effect on the consumer; but provide the corporation with tax benefits, an easier reinvestment environment, and reduced risk to owners.
Verily Life Sciences
JB3 Investments: Alphabet Subsidiaries
Money stock is a measure of the supply of money in a particular level of the economy.
M1 is banknotes/Coins in circulation + travelers checks + demand deposits
M2 is M1 + savings deposits + money market deposits
Their respective velocities measure how often money (M1/M2) is spent in a given time.
Hypothetical example: 9/20: John bought a coffee from Jill for $5, then Jill bought shoes from Andrew (with the same $5), then Andrew bought fruit from Paul (with the same $5).
9/20 M = $5 9/20 Velocity of M = 3
Post-recession-America has seen an increase in M1/M2 along with a decrease in the velocity of M1/M2.
It isn't a coincidence that the money supply started behaving abnormally after the FED dropped the federal funds rate close to zero.
When the FED is making unprecedented policy decisions; the people should expect unprecedented results.
ETF - Exchange Traded Fund - "A marketable security that tracks an index, commodity, bonds, or a basket of assets like an index fund."
In the last decade, ETF's have grown in popularity more than any other investment.
The graph below shows their explosive growth.
Q2 2006 Value: $17,565,000,000,000 - Nearly 18 trillion USD$ in ETFs
10 years later +$384,120,000,000,000 (Yearly growth rate - 219%)
Q2 2016 Value: $401,685,000,000 - Nearly 402 trillion USD$ in ETFs
An issue that could be amplified by ETFs larger market presence is that they can fundamentally fail.
Flash Crash's 2010 & 2015
Flash Crash Wiki
In the "Flash Crashes" of 2010 and 2015, ETFs became unhinged from their underlying "value". Both instances were partially caused by HFT (High Frequency Trading).
"Bids on dozens of ETFs, and other stocks fell as low as a penny a share" -WSJ
(^talking about 2015)
In Complex Adaptive System Theory, a Cascading Failure is when the failure of a part causes the failure of successive parts. (Domino Effect)
Both flash crashes were cascading failures in financial markets. Regulatory measures taken to prevent another ETF issue are insufficient.
On Thursday (9/8) the Federal Reserve released their plan for a financial crisis. They will institute a "countercyclical-capital-buffer"; simply put, they plan to increase reserve requirements.
Increased reserves are likely to reduce the number of bank insolvencies, but they also reduce the amount of money banks can lend. This policy decision could hurt consumers/business owners who have become reliant on debt to function.
The United States is more reliant on debt than at any point in history.
LINK TO SOURCE ARTICLE
Asset Price Bubble
Federal Reserve Bubble
Treasury Bonds and LIBOR
Rucker, Patrick. "Federal Reserve Says It May Ask Banks for Extra Capital in a Crisis." Reuters. Ed. Leslie Adler. Thomson Reuters, 08 Sept. 2016. Web. 09 Sept. 2016.
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