Maybe there will be a "huge bubble" in the future but it doesn't look that huge right now.
Forward P/E for S&P500 is about 22. That is 4.5% yearly return even if there is no growth beyond 2026. This is also real growth as earnings raise with inflation so nominal expected return is about 7% even if there is 0 growth beyond 2026.
Meanwhile risk-free rate (basically short term government bonds) is around 3.5% per year right now (nominal).
That 7% is quite pessimistic as some "net growth" (growth - costs of generating it) is expected beyond 2026 and you can only get 3.5% "risk-free" I am not sure why people call current valuations crazy or what their expectations for "fair valuations" are. Equity risk premium seems to be still above 4%. Maybe that's on the low side but far away from bubble territory, let alone "a huge bubble".
>>As a European, I am glad that this is finally discussed in the open! I have made multiple comments in the last weeks that one of the most important things, for me, is an alternative to the Visa/Mastercard duopoly.
The main reason we don't have an alternative to Visa/Mastercard duopoly is protectionism of EU countries. There are local alternatives that do pretty well (BLIK in Poland, Revolut Pay in countries where it's popular) but entering more markets is like pulling teeth because EU throws regulatory obstacles at every step.
>> Why isn't the European Commission mandating these app payments in different EU countries to connect with each other? Wouldn't that go faster than the digital euro, that is set to come no earlier than 2029?
It would but then their non-local alternative could win which they really don't want to happen.
> because EU throws regulatory obstacles at every step.
No, the gatekeeping is done by local banks and governments to protect their oligopolies/cartels.
There are many instant-pay apps across Europe and they are intentionally not interoperable outside of local markets. Each local banking oligopoly is trying to fence off competition. The main fear is from smaller neo-banks.
>>No, the gatekeeping is done by local banks and governments to protect their oligopolies/cartels.
If you are pointing the distinction between gatekeeping at the EU level and country level I am not contesting that. It's clear though that the gatekeeping is the problem here (and in many other industries in EU).
> The main reason we don't have an alternative to Visa/Mastercard duopoly is protectionism of EU countries. There are local alternatives that do pretty well (BLIK in Poland, Revolut Pay in countries where it's popular) but entering more markets is like pulling teeth because EU throws regulatory obstacles at every step.
That doesn't seem to make a lot of sense? How did Visa & Mastercard manage to go through the "protectionism of EU countries" then?
You forgot the part where there is a bootstrap problem for any fintech.
You need the appropriate license to make money, but you can only get that license if you already have enough money.
On top of that is a requirement that basically demands that you have employees in charge that have worked and gained job experience at the established businesses.
This is good for stability, but it also means that innovation gets nibbed in the bud.
Neither my comment, nor the prior one, had anything to do with fintech.
Concerning "innovation" in financial systems, done by relative outsiders, with little experience or incentive to keep the system stable: Given the track record, I'd argue that such innovations should either be outright banned, or limited to some tiny percentage of the relevant financial market. The world does not need more FTX's.
For me the only feature I want from a taskbar/status bar is ability to hide it permanently so it never comes out until I press a key on a keyboard (like meta/Windows key or even a key combination if needed).
Task bar auto popping just because you weren't precise with your mouse and moved it too far down or to the corner is very annoying to me.
I treat it as a test if desktop environment have "we will force our way down your throat" or "we try to make it great for everyone" attitude. Windows and Apple are choosing the former. KDE is choosing the latter.
I am surprised because somehow they get it on phones (hidden by default, needs a gesture to bring down). Real estate on a laptop is a just as precious, especially vertical real estate.
Dividends in effect force you to sell while buybacks redistribute to people who want to sell/realize it. They are also more efficient tax wise.
The only good reason to pay out dividends instead of announcing buybacks is a view that your shares are overpriced. Then you can't buy them back without facing a potential lawsuit (you are making a company buy something you know is overvalued).
>>Tax on investments are averagely taxed compared to other countries.
That is only if you haven't accumulated wealth yet.
The combination of quite high capital gain tax with sky high wealth tax, pretty high income tax isn't very attractive if your plan is to accumulate some wealth.
If you just want to make enough every year to live there I guess it's reasonable though.
I future-proofed myself by moving to a region with a €3M exception. So that I have a long way to go before paying wealth tax.
CGT is progressive and around 20%, compared to other European countries that is fairly average. Some Eastern European countries are at 15%, Belgian is going to 10%, Switzerland differs per canton.
Also, no CGT for fresh immigrants if you are able to use the Beckham law.
Is the exception still valid? I thought the new central regulation in effect removed those (if the region has exceptions then you pay federal "solidarity" tax). They introduced it to fight Madrid's and Andalusia's exemptions.
I investigated it some time ago though when I was considering moving to Andalusia so maybe something changed.
The problem with academia is that it's often more about politics and reputation than seeking the truth. There are multiple examples of researchers making a career out flawed papers and never retracking or even admitting a mistake.
All the talks they were invited to give, all the followers they had, all the courses they sold and impact factor they have built. They are not going to came forward and say "I misinterpreted the data and made long reaching conclusions that are nonsense, sorry for misleading you and thousands of others".
The process protects them as well. Someone can publish another paper, make different conclusions. There is 0 effort get to the truth, to tell people what is and what isn't current consensus and what is reasonable to believe. Even if it's clear for anyone who digs a bit deeper it will not be communicated to the audience the academia is supposed to serve. The consensus will just quietly shift while the heavily quoted paper is still there. The talks are still out there, the false information is still propagated while the author enjoys all the benefits and suffers non of the negative consequences.
If it functions like that I don't think it's fair that tax payer funds it. It's there to serve the population not to exist in its own world and play its own politics and power games.
I would pay at least 300$/month just for hobby projects. The tools are absolutely amazing at things I am the worst at: getting a good overview on a new field/library/docs, writing boilerplate and first working examples, dealing with dependencies and configurations etc. I would pay that even if they never improve and never help to write any actual business logic or algorithms.
Simple queries like: "Find a good compression library that meets the following requirements: ..." and then "write a working example that takes this data, compresses it and writes it to output buffer" are worth multiple hours I would otherwise need to spend on it.
If I wanted to ship commercial software again I would pay much more.
>>Having a startup in the US is a huge mess due to all the states and taxes,
In EU you will need to deal with VAT basically from day one (10k EUR of revenue). In US you will not deal with it until you can afford it as thresholds are very generous.
If dealing with VAT is a large problem for your business today, running a business might just not be for you, it's very trivial today to get it right and there are even platforms who basically does all the "hard" work for you. But even without those 3rd party solutions, I think the complexity is vastly oversold, it's relatively easy to get right compared to other regulations. Maybe I'm just EU-damaged already though, YMMV.
>>If dealing with VAT is a large problem for your business today
It's not a problem for me today. It was a big problem when I had no revenue, needed to do all the paperwork, meet ridiculous local accounting requirements connected to selling software in a different currency than my local one, write code, setup licensing, shipping the software to the clients etc.
It was a major source of stress and sleepless nights for me.
>>But even without those 3rd party solutions, I think the complexity is vastly oversold, it's relatively easy to get right compared to other regulations. Maybe I'm just EU-damaged already though, YMMV.
It's easy when you have done it once and know the process.
It's not so easy when you need to understand if your product meets a definition of an electronic service or something else, when accountants you are meeting don't know how to setup VAT-MOSS thing because it's still rare or when you need to add your tax authority about something and their reply is that they don't know so you need to write an official inquire (that requires a lawyer) so you can get your answer in a few months.
When I was setting a new company in another country it was easier for me because I already knew how the process work and I could hire a competent accountant before the new company had any revenue. It wasn't so simple when I had 0 capital and just wanted to ship software to see if people want to buy it.
> It's not a problem for me today. It was a big problem when I had no revenue, needed to do all the paperwork, meet ridiculous local accounting requirements connected to selling software in a different currency than my local one, write code, setup licensing, shipping the software to the clients etc.
Since this depends mostly on what country you are in/you are setting up the country in, what specific country was this? Because it's not the same everywhere, and by the sounds of it, is a lot more complicated than most other EU countries. Germany is famously bureaucratic, as just one example, and differs wildly from the type of experience you'll have in Sweden.
> It wasn't so simple when I had 0 capital and just wanted to ship software to see if people want to buy it.
Most people, accountants or not, won't tell you this, but you're usually fine starting to charge people and running a business "unofficially" for a couple of months without having to pay any fines or anything when you finally "regularize" your situation. Many accountants have dealt with this sort of setup countless of times too. But again, people won't advice you to take this route, but it is one option if you just wanna ship software and see if people want to buy it. If no one buys it, just don't tell anyone :) Unless you're doing five figures or more in revenue, no one will mind.
For me it's very stressful to not comply with the regulation on purpose hoping I am too small to not get punished by the authority. It would be easier to just ignore the regulation.
I get this makes me not well predisposed to do business in EU. Thank you for your advice.
> It would be easier to just ignore the regulation.
Well, in your case, completely ignoring something rather than doing it later sounds like it would be more stressful for you, if the problem is not complying? I'm don't think wanting to comply with regulation makes you "not well predisposed to do business in EU" and I'm not sure where you get that from.
Hence most countries has a threshold for when you need to charge the country-specific VAT and let you use the local one until you reach there. It differs by the country as far as I know.
But there is no threshold for cross-border selling in the EU.
Fine if you're selling widgets at a market in Germany - but if you sell software abroad, make sure you're following [each] one of the 27 VAT codes correctly.
(From what I understand - would love this to be wrong)
Following US sales tax has way more complexity. In my county alone there are many different rates depending on the city in which the sale is made. Even just finding out authoritatively which jurisdiction to pay taxes to is nontrivial, practically impossible to solve without dedicated software.
> Fine if you're selling widgets at a market in Germany - but if you sell software abroad, make sure you're following [each] one of the 27 VAT codes correctly.
Yes.
> But there is no threshold for cross-border selling in the EU.
Kinda, but misinterprets the VAT itself.
Basically, VAT is paid at the point of sale and local thresholds apply.
>>Basically, VAT is paid at the point of sale and local thresholds apply.
The threshold is 10k EUR (total sales to EU). The point of sale in case of software/electronic services is the country of residence of your customer.
You need to collect two pieces evidence of that location, usually billing address and IP. If those don't match (your customer has used a VPN for example) you need a 3rd piece.
One Stop Shop helps with it (when I was starting my company it didn't exist and predecessor VAT MOSS was just being introduced and no one knew how to comply with it) but you still need to charge local VAT rates and report quarterly.
You can just use a service for that if you find that too much work to do yourself. There are MoR services that do that for you for EU, AU, US states where it is required etc. It is more that most people outside the EU find it bullshit and just don't do it and complain about it anyway.
EU like making new regulation.
There are simpler steps to make doing business here easier:
-force banks to respect EU free trade union and stop them from discriminating EU citizens and companies who are not citizens
-stop abuse when it comes to currency conversion rates
-raise VAT-free threshold to something that doesn't catch very small companies, 200k EUR in sales to EU would be a good start (currently it's 10k)
-force EU countries to move all the bureaucracy online; it's very realistic, Poland has done it (it's not 100% yet but close to it)
-enforce English as 2nd official language for business related paperwork
Instead I am pretty sure we will get more paperwork, requirements and way for bureaucrats to prolong every process and request more documents on the way.
>>At least in gambling they don't let the sports referees and players gamble.
Oh c'mon now. This is completely impossible to police. Players and referees are not under constant supervision. They have families, friends, partners. Some of them got caught but you can be certain most weren't because it's just very difficult to catch.
There are always multiple people who know about key players' injuries, illness, other factors. The game is negative sum and additionally insiders take a a chunk for themselves. It's worse then roulette which at least doesn't pretend to be fair.
It isn't impossible to police. Players and referees are under supervision...I am not sure why you think this isn't the case. Regulated gambling companies i.e. not Polymarket, maintain lists of people who are connected to sports inc. through family. And they maintain systems that monitor unusual betting activity that is shared across the industry, it is quite easy to detect this activity because most of the flow that bookmakers see is uninformed. So if you see a customer that doesn't bet regularly put down $10k, line moves in their favour...that is obviously extremely suspicious because that won't happen with 95% of the volume you take.
As an example, there was a football player in England who had a friend that bet on a transfer market (a market that is extremely prone to inside information). It was detected immediately (despite being a relatively small bet of $10k, I have heard anecdotally that insiders have been detected in this market down to $500 bets), the player was banned, fined $500k, etc.
Btw, the reason these systems exist is because there are certain sports that are too lucrative not to make a market in but the economics/nature of the game mean that matches are easily fixed: 99.99% of this activity is low-ranked professional tennis, and surveillance has been very effective (all of this is funded, not by professional tennis, but by gambling companies). Generally, this isn't as prevalent with US sports because none of those preconditions exist for the major sports.
Maybe there will be a "huge bubble" in the future but it doesn't look that huge right now. Forward P/E for S&P500 is about 22. That is 4.5% yearly return even if there is no growth beyond 2026. This is also real growth as earnings raise with inflation so nominal expected return is about 7% even if there is 0 growth beyond 2026.
Meanwhile risk-free rate (basically short term government bonds) is around 3.5% per year right now (nominal). That 7% is quite pessimistic as some "net growth" (growth - costs of generating it) is expected beyond 2026 and you can only get 3.5% "risk-free" I am not sure why people call current valuations crazy or what their expectations for "fair valuations" are. Equity risk premium seems to be still above 4%. Maybe that's on the low side but far away from bubble territory, let alone "a huge bubble".
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