“Interest rates (and changes, and future expectations regarding them) have huge impacts on asset prices” is something which is widely understood by finance professionals.
“Asset prices materially impact your life” is not widely understood except by finance professionals.
“Asset prices materially impact your life” is not widely understood except by finance professionals.
There are many, many, many implications to this, but zooming in on just one because it is probably surprising: a large portion of engineering compensation is now dependent on interest rates, but functionally no engineers model their compensation as if this were true.
Speaking generally, increases in interest rates should cut the value of stocks, including e.g. RSUs issued by AppAmaGooBookSoft, and decreases should increase their value.
Since engineering offers are set by a competitive market with material reference to AppAmaGooBookSoft...
Since engineering offers are set by a competitive market with material reference to AppAmaGooBookSoft...
“My salary is a complex financial derivative” is a very counterintuitive result for many people for whom it is true.
(FWIW I think that people should probably concentrate on the idiosyncratic risks part of that derivative rather than the interest rate part but it’s worth at least understanding that it is there so you don’t do something like get an ARM thinking ‘If rates rise, equity covers it’)
(FWIW a lot of people would use “complex financial derivative” as a slur. I’m just using it in the positive sense. I broadly think equity ownership by employees is one of tech’s major structural innovations and is a huge portion of ongoing renegotiation of how the pie is split.)
(There exist many options to trade off legibility / certainty for upside if legibility / certainty are more important to you, and there are many firms which are happily selling what you’re buying.)
