I am very conservative and 100% agree on buybacks. It’s a net negative on the economy.
Investing in the investors is not investing in growing the company or the economy, it just grows the stock. We should heavily disincentivize things that only grow the stock.
I am not even for paying employees above the market rate for the quality of employees you want.
My opinion is not like the labor victimology Reich is pushing either, it’s about the economy. Pay the money to the stock holders in dividends and let them decide if they want to use the dividends to buy more Lowes stock or not. Most will not.
Tax treatment is different because investors can choose if they want to participate, rather than dividends which are a mandatory taxable event. So not sure you’re really in the side of “let them decide.”
But that’s taxes, just a policy difference. And those who participate in the buyback pay cap gains. That isn’t the economic difference you’re making it out to be.
When the stock is bought back, it's "retired" - it's removed from the market. If there are 100 shares worth $10 each, the company is worth $1,000. If the company buys back 50 shares at $10, it's still a $1,000 company, but there are now only 50 shares worth $20 each.
That's an extreme example, because no company buys back half their market cap, just wanted to illustrate the point that stock buybacks directly benefit all stakeholders, even though who don't sell.
I fully understand your point, I think you missed mine.
All investors have more ownership, but all investors did not also benefit by tax avoidance on what could have been a dividend vs a buyback.
People have to pay taxes on a dividend in the quarter or year it is received unless it’s in a qualified plan (like 401k) or it’s an institutional than works tax free like a huge pension plan.
As an owner of a large 401k portfolio, I rather have the dividends.
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u/Big_Satisfaction5547 5d ago
Stock Buybacks basically benefit all investors.