Loooooool.
With artificial increases in value?
Wow. How far things have fallen
Smh
People now support corporate payouts because they get pennies if they are invested...in the short term.
Lol. Wow.
Do you understand what a stock buyback is? The purpose of issuing stock is to sell equity in a business to raise capital to invest in the business. If there are no attractive opportunities to invest then the business is obligated (but not required) to return that capital back to the shareholders. They can do that with a dividend but that’s a pain to start and stop or change. It’s a lot less complicated to undilute the existing shares by buying some of the shares back and dissolving them, thus increasing the value of the remaining shares in proportion to how many were dissolved. It doesn’t destroy money. The business can always issue new shares in the future and undo the buyback. It’s basically the same thing as paying off a loan or line of credit held by the shareholders.
This is all true. It was also illegal prior to the Reagan administration due to it literally being market manipulation that basically only benefits a-list investors, for whom it is a much lower tax burdened gain in their wealth.
Investment used to be a much longer term strategy. Investors used to understand that not every single year is going to give them a gigantic year over year return. Stock buybacks should be made illegally again. Corporate profits should be used for reinvestment (which is not taxed) or paid out as dividends (which are taxed).
Lots of shills in this thread defending buybacks like they're some kind of legitimate investment strategy. Can they be used wisely? Sure. Are they ever used in ways other than to manipulate the market and enrich the already rich? Nope.
So everyone other than the business itself is allowed to buy the stock, but you think a business should not be allowed to buy its own stock.
Prior to 1982 buybacks were not illegal. They were excessively complicated to perform legally because of protections made for the benefit of shareholders. The 1982 legislation that you are referring to explicitly made buybacks legal under the same conditions that the original laws were passed in order to protect.
Buybacks could be a form of insider trading and the company could perform a buyback immediately before private information became public and thus the company could have bought a lot of shares at a lower price than after the news.
The 1982 law still enforces this along with the other shareholder protections that the older legislation provided.
So if buybacks don’t harm shareholders and according to your own words they benefit the investors, why exactly should they be illegal?
By using profits for short term a-list investor and executive enrichment instead of reinvestment into the company. And to be clear, I'm not against investors having a return. But their return should be because the company's value is actually increasing as a function of its success, not as a function of it artificially inflating the value of its stock.
So if there are no good investments for a business to make then they should just sit on the capital and leave it unallocated and idle instead of returning it to the owners of the business so those investors can reallocate the capital themselves. Seems like a pretty bizarre take, especially describing it as harmful to the company.
No one posts threads like this when a company dilutes their shares but for some reason doing the reverse is harmful, so harmful that these companies are doing it to themselves over and over again without any negative impact on their market capitalization.
1.6k
u/Big_Satisfaction5547 5d ago
Stock Buybacks basically benefit all investors.