Cloud Native Quiz:
How many of these organizations have you heard of?
How many of the categories do you understand well?
For how many organizations are you able to describe what they sell in a single tweet?
landscape.cncf.io
QUIZ:
When these cloud native businesses create open source software ate the associated costs capitalized or expensed?
Is the open source software created by these cloud native organizations included in GDP? Hint: No.
"Accounting regulators (GAAP) consider internally-generated intangibles as regular expenses, like salaries or interest expenses, whereas tangibles are considered assets. So, corporate balance sheets proudly exhibit industrial age buildings and machines" google.com/amp/s/levtheen…
"Consider the accounting absurdity: the major value creators of modern businesses, like R&D, brands, or IT, are treated expenses, whereas the “commoditized” tangible (fixed) assets―marginal value creators available to all competitors― are capitalized." papers.ssrn.com/sol3/papers.cf…
"A firm investing heavily in R&D, IT, brands, or business processes (e.g., customer recommendation algorithms), may appear to be an overvalued [since it isn't capitalized] ... whereas in reality its valuation isn’t excessively high" papers.ssrn.com/sol3/papers.cf…
TOP SECRET: please don't tell anyone!
The failure of accounting to capture how value is created is a source investing edge. You can turn investor (and media) obsession with "earnings" into investing advantage if you understand important assets that aren't being capitalized.
WARNING⚠️ - Investing based on approaches that do not involve grabbing a P/E ratio from one of many websites available to anyone anywhere, requires that you do actual work to understand the actual business of the company. It is exactly what people do in job at a real company tho.
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