March 26, 2010

Google Inc.
Human Resources Department
1600 Amphitheatre Parkway
Mountain View, California

Dear Madam / Sir:

Re: Application for a trader position

I read with interest that Google is looking to hire traders to manage its $24 billion cash reserve. I would like to apply.

I have attached my resume for your consideration and would like to emphasize a few additional points. I’m a hard worker, am team oriented, love to play basketball at lunch, am comfortable riding a Segway, and importantly, I’m not evil.

You should also know, however, that I’m not much of a trader. I’m chronically long-term oriented and don’t believe there is much to be gained by trying to figure out the markets’ short-term moves. But I can bring something to Google that is much more important to the bottom line. While the other new hires are immersed in credit spreads, swap rates and curve trades, I would bring a keen sense of reward and risk.

Indeed, that is what the company’s move is all about. Google management is moving out the risk curve by buying longer-term securities and taking credit risk. There will be potential for higher returns, but that will come with short-term volatility. If there are quarters when interest rates rise and/or credit spreads widen (due to a sluggish economy), the modest income generated by the cash reserve could turn into losses.

In case you choose not to interview me, I would like to take this opportunity to comment further on this new initiative:

  • First, the strategy shift makes perfect sense given the resources Google has (cash and cash flow) and the risk-taking nature of its culture. The balance sheet is under-utilized.
  • I don’t presume to know how good Google is at capital allocation, but I will be presumptuous and say that investment management is not its core competency. Therefore, I would suggest that management use their clout to get wise, senior counsel from non-Wall Street sources and move slowly in this venture.
  • It’s an interesting time to move out on the yield curve (lengthen the term of your investments) and take more risk. The whole world has been searching for yield and as a result, the easy money has been made. The traders will need to work hard to eke out the extra return Google is looking for.
  • In combination with this initiative, management should consider ‘dividending out’ a portion of the $24 billion that is not needed for corporate purposes. If I was the reward/risk manager, I would encourage management to ask the question: Can we do more with this money than our shareholders can? Given our lack of experience in this area, I think the answer is no.

I look forward to talking more about this exciting opportunity and meeting the team at Google. If you are interested in talking to me, please let me know as soon as possible, as I would like to line up some tee times around the interviews.

Yours truly,

Tom Bradley