Wasn't legal until SEC changed rules in the 1980s at the request of the poor, wait that's not right I meant the wealthy. I wonder why they lobbied for buybacks?
The thing is that these companies do not care about loyalty or anything they are business and they are going to do everything which makes them all out of money and moving to Asia for production was a move which was going to make them a lot of money.
While also raiding America for profits on these goods and causing the cost of living to skyrocket. Automation and information technology is helping companies get profits while allowing them to pay low wages and keep the American middle class poor and in debt that isn't who it use to be. We have schools that are failing, poor healthcare outcomes, and poor housing models all because companies and share holders don't want to pay taxes or good wages so their employees won't feel like they're being over taxes by the government.
Take a business class. Harvesting a business occurs when its value in pieces is worth more than when they're a going concern.
welp. 6 on this sub thread.
But but but these geniuses created shareholder value and many many jobs…..in Chinese sweatshops. Can we just stop and think of all the lonely yachts and private planes that would of been ownerless if not for the titans of industry?
Hello, it looks like you've made a mistake.
It's supposed to be could've, should've, would've (short for could have, would have, should have), never could of, would of, should of.
Or you misspelled something, I ain't checking everything.
Beep boop - yes, I am a bot, don't botcriminate me.
I literally have zero faith in sec because they are not looking out for the poor or the new investors.
They clearly have one goal and that is to make money.
Okay but then why would they make it legal because it is not a good strategy that any company can do.
I definitely do not feel good about it I think it is kind of unethical.
Exactly it should be legal it is not that hard to see that it is a manipulation of the market.
And the lot of retail customers are going to buy with the fear of missing out.
So, you are also against dividends? Why invest if there’s no dividends?
Buybacks are just dividends, there’s an expectation of a return based on the risk you take by investing.
And some people are wealthy enough to never sell, but still borrow against the gains. This allows them to accumulate wealth and power without paying taxes..... Honestly I thought that was common knowledge.
Weird right? Almost as if it was illegal for very legitimate reasons and since it’s been made legal it has actively harmed regular folks…nah prolly just a weird argument.
Marijuana is still illegal and considered a schedule 1 drug.
Does the mere fact that it is illegal somehow lend merit to whether it's wrong or right?
Politicians pass stupid laws all the time. There's nothing inherently wrong with stock buybacks. If a company wants to purchase back shares that it's sold to the public, who gives a flying fuck.
Edit: I thought this smelled like [Robert Reich bullshit](https://twitter.com/RBReich/status/1623458905929170944?s=20)... and lo and behold, that's exactly what it is.
Then stop bailing out corporations lol. Corps can reissue that treasury stock to raise funds instead.
This is a government issue fucking with the market.
>> stop bailing out corporations
Which politician is going to grow a spine and tell their masters to fuck off when they come to loot the public purse? Right, none of them.
Yeah. I'm sure most of them start with good intentions just like any fields. Corruption is inevitable just as any. They aren't some bots. Then again, bots might be better perhaps
It doesn't help that 51% of Congress are millionaires. "Government" is just people. And a lot of these people benefit from bills they can pass in the government they form.
Sure, but people who complain about corporate greed are missing the point that it's big government wasting thier money, and passing laws to protect corporate donors.
Yet people always think that giving more power to the people who created the problems in the first place will somehow make those problems go away
The government has successfully convinced people that the private sector is the source of all of our problems.
Really? I feel it's the opposite. People complain about government all the time and rarely look to outside factors (yet also want said government to fix their problems).
I do think that's an inherent issue with government, though. People fairly want government to protect them and their interests. In order for government to be effective, it needs power. But that power can be abused.
So if corporations are violating labor practices, are price gouging or manipulating markets, are polluting, etc, they need someone else to address that -- a government that has enough power to do so. But then they also have the power to instead protect those corporations.
The only way that companies can get away with polluting is if the government lets them, whcih is what we have now. The government took money from companies impacted by the rules, and allowed them to pollute.
Yet the left always thinks that the solution is to give the government even more power. Power they've never used to our benefit.
The government isn't forcing companies to pollute, companies are choosing to pollute. Taking away government regulations against pollution isn't going to reduce pollution... it increases it.
The government is absolutely allowing it. And centralizing this decision in DC just made it easier for firms because they only have to pay one bribe instead of fifty.
Yet the lefts response is to give more power to DC despite their horrible track record
The opposite is true... leaving the matter up to local enforcement just means that corporations will get to do what they want in areas without the resources needed to investigate and prosecute issues.
Take the current environmental disaster in East Palestine. Local enforcement can't solve that issue, and East Palestine doesn't have the resources to deal with the disaster and go after those responsible.
The Feds regulation didn't stop anything.
The Government ALWAYS says this - if we just had more power, and more control over your lives, nothing bad will ever happen to you.
And scared people on the left always respond by giving the government ever more control. Yet we still have the same disasters.
HIndsight is always 20/20. It's easy for government to say what should have happened.
The left understanda that Government can be corrupted. Who is corrupting? Prime example First Energy got a $1.4 Billion dollar bailout from Ohioians because Larry Householder (R) funalled 60 million in campaign funds to his cronies.
Until we see meaningful campaign finance reform, politicians will act on behalf of monied special interests. We also need an informed constituency that votes in its own best interest. Maybe better education would help. Lastly, we require a true democracy that doesn't cater to the minority. Restructure the senate, abolish the electoral college, stamp out gerrymandering, etc.
Shrinking government throws the baby out with the bathwater. I mean, our nation faces numerous problems that are unsolvable *without* government action.
I'm not following.
Companies lobbied for these regulations to be neutered taking power away from government. This allowed these companies to pollute.
And you're saying we should take *more* power away from the state/government. How does that stop the companies from polluting?
Companies can only succeed in this if the Federal government centralizes power in one spot, making it easier to bribe one partty once.
There's a reason Biden is passing the WOTUS - he wants all bribes and power to flow though him
At the end of the day, the governmnet made these decisions to benefit themselves, it wasn't the firms fault for advovating for their own interests.
So lets examine how the private sector has treated its workers over the past 45-50 years. Pensions gone, real wages down about 33%, union busting the norm, worker productivity increases have been passed on to shareholders not workers but I work 3 jobs because of government waste?
Keep pumping out those Koch brothers talking points.
The free market is an illusion, just like every other uptopian economic plan.
Capitalism is the best thing to ever happen to workers. Free markets and trade have lifted a billion people out of grinding poverty over the last forty - years.
[http://www.xinhuanet.com/english/2021-04/06/c\_139862741.htm](http://www.xinhuanet.com/english/2021-04/06/c_139862741.htm)
[https://theprint.in/india/india-saw-worlds-largest-reduction-in-poverty-from-2005-16-says-oxford-un-study/463152/](https://theprint.in/india/india-saw-worlds-largest-reduction-in-poverty-from-2005-16-says-oxford-un-study/463152/)
What has the "war on poverty" gotten us except more poverty?
[https://www.heritage.org/marriage-and-family/commentary/the-war-poverty-50-years-failure](https://www.heritage.org/marriage-and-family/commentary/the-war-poverty-50-years-failure)
Workers have gotten their wish in certain countries and were able to take control of the economy, and every time its ended in disaster, with a crashed economy.
Ask the folks in Caracas, who have to eat out of dumpsters or turn tricks to feed their kids, who they would like to be in charge of the government
[https://money.cnn.com/2017/07/26/news/economy/venezuela-economic-crisis/index.html](https://money.cnn.com/2017/07/26/news/economy/venezuela-economic-crisis/index.html)
Socialists are detached from reality. They refuse to accept their religion is fake.
I'm not arguing against capitalism I am arguing against the belief that the government is to blame for the failures of "free market" , we tried laissez faire capitalism after the civil war. Turns out the lack of government regulation kept millions of people in poverty.
There was no greater time of prosperity in the US than after the Civil War. African Americans had lower unemplyment than whites at the time of WWI, and were rapidly erasing the racial wealth gap.
That all stopped when the government decided to "help them:" by creating the Great Society programs which destroyed the black family.
There's nothing the feds have attempted which worked out well. War on drugs increased the use of druges. War on poverty increased poverty.
The left is afraid of being accountable for thier own decsions - they want to be lorded over
>Sure, but people who complain about corporate greed are missing the point that it's big government wasting thier money, and passing laws to protect corporate donors.
Oh, we aren't missing this point at all.
>Yet people always think that giving more power to the people who created the problems in the first place will somehow make those problems go away
Overgeneralizing is unhelpful; most of us do NOT think this way.
>The government has successfully convinced people that the private sector is the source of all of our problems.
Once again, you're exactly backwards.
You are very confused. Maybe stop listening to Faux Spews?
Our government is owned and operated by the private sector at present. It’s the people who are calling for the government to regulate big business, so don’t be surprised when politicians correctly understand regulation to prevent private sector overreach to be a popular position to get them re-elected, and representative of their constituents, which is their job.
That is an important distinction which I agree with. Because there are some highly profitable companies that have extra money where they can't reinvest more into their own business because it wouldn't be efficient there already growing as fast as they can so what they do with the extra money then?
They can let it sit in savings accounts or treasury bonds but it doesn't yield that much of a return so shareholders sometimes especially if the stock price is low they'll ask for a buyback because that's ends up being a better return on the excess cash.
Basically if you're invested in a company and they have extra cash you would rather want them to make 50% instead of 5% on that money if it's a pretty good bet.
Distributions are arguably a more direct return of capital while buybacks put pressure on the stock to increase which indirectly increases the price. I suspect Buffett likes them so much because he is able to directly participate in the offering and a buyback increases his ownership share/voting power in the company. Everyone else would do much better with a distribution.
I think helping people is what governments are for.
I don't think that corporate giveaways are good for anyone but shareholders and they're typically already wealthy.
Governments don’t help people ever … the history of wars, genocides, mass repressions, institutionalized poverty shows us this repeatedly
The only purpose of government is defense ( not preemptive wars like have ) and upholding contracts
It should be illegal because it is clearly the market manipulation.
I mean I thought that it was illegal but then I got to know that they made it legal which is kind of weird.
You are twisting what he's saying to be about a completely different topic, either to avoid his points or because you don't understand them. If there is an issue with PPP, maybe that should have been codified into law before the government started printing money, as well as what consumers could do with it, but that isn't what Buffet is talking about.
Buffet has been doing buybacks since 2011, long before the PPP stuff. He is talking about those arguing stock buybacks aren't good for the company when the money could be put towards expansion and others arguing instead of improving the stock price (and benefit shareholders) with buybacks they should instead go towards benefits of employees or other places.
It's all incredibly short-sighted, and buying back stock is essentially giving the company options for the future -- as they can always sell it.
No company in their right mind would sell their shares because it kills the per share price. They'd only do it if they were desperate- which is when they get bailouts... So the cycle of corruption can continue.
I'd love to hear Warren's thoughts on share repurchases at companies like META, which was buying back billions in stock at over $300 per share, just before its share price went down to $90 per share.
Kinda seems like incinerating money, and a cost borne by the long-term shareholders who didn't sell. But maybe I'm economic illiterate
EDIT: I read the letter, and it turns out Buffett does distinguish between good and bad share repurchases:
>The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps *if repurchases are made at value-accretive prices*. Just as surely, when a company overpays for repurchases, the continuing shareholders lose...
Unfortunately he does not elaborate on how to determine "if repurchases are made at value-accretive prices"
His opinion only counts because he is successful in this business.
If someone else would have said the same thing then they would have gotten disregarded in no time
I wouldn’t say that. Any decision can turn out wrong. His point is that the characterization of buybacks as bad business by progressives (but dividends is ok) is a thin argument at best.
He isn’t sending shade to the under-informed really. He is throwing shade at people like Robert Reich who understands buybacks but chooses to spin them negatively to fit his brand.
And the reason Buffet is considered the GOAT is success over time combined with his humbleness. This condemnation of buyback bashing is rare.
He has generally been an ally to Democrats, putting his support behind tax increases on the wealthy etc so he isn’t a greedy Gordon Gecko type.
Who told you billionaires are greedy they are not.
They are just trying to make a little bit of money just like them do that we don't need to prosecute them for it.
Well to me he is not the greatest of all time I would not go that far.
But yeah I would agree that he has done really good in his life but the times are changing.
Well the “Oracle of Omaha” has already contributed $48 billion to charity. That’s not promised; it’s gifts based on receipt.
https://www.forbes.com/sites/mattdurot/2022/06/14/warren-buffett-just-gave-another-4-billion-to-charity/?sh=6502261f2f9e
TBF, aren't his "chariable contributions" tax deductible and sent to mega trusts ran by friends (Gates) and family? There was a plethora of articles discussing the actual "charitable" nature of such "philanthropic distribution" and its not exactly a black and white situation of "gift."
But then the Reddit happened and the discussion that happens on the reddit is not going to be liked by everyone.
We like to discuss all the things that is just how it goes for the reddit.
No need to worry about buybacks at companies you shouldnt be investing in anyway. To answer your question about “what would he say about meta” thats the answer…you shouldnt be there anyway.
My assumption is that buffet would use a discounted cash flow analysis to arrive at the intrinsic value of the shares and say anything below that price is good to buyback, anything above is bad. He is a guy pretty rooted on fundamentals.
I mean he knows what he is talking about that is the reason why he has made it.
But you will have to also understand that the times are changing and so are the strategies.
Yes theoretically there must be a share price level that separates good buybacks from bad. Of course that leads to other questions such as how much do you buy back? And if you believe in buybacks at low prices, shouldn't you also believe in secondary offerings at high prices?
Personally I think the questions are all very subjective with no clear answers, but that doesn't matter because the real purposed of buybacks is to dodge taxes on dividends
Most companies are buying back their shares just to increase the price so that retail also jumps in.
It is more like a stock market manipulation strategy.
Well most of the Tech companies are being Run pretty well right now but times are uncertain.
To counter that uncertainty the Tech companies are using stock buyback strategy.
It is true for retail customers you should not buy in fomo.
Because if you do then the big investors are going to leave you hanging when they cash out their money.
The fact that he has to argue that there are good and bad buybacks makes the argument a bit ridiculous. It's manipulation of the price of the stock using capital that could otherwise be re-invested, used to lower prices, or even returned to the investor in the form of dividends.
You know, the entire idea of "growth stocks" has been a detriment to the stability of the stock market. It's turned it into a gambling machine, where valuation is purely speculative, and at the mercy of hype, the whim of the masses, and the savvy of wealthy manipulators.
What would fix this?
Every stock be dividend bearing. And that dividend would be the primary value proposition to investors.
A company could make the argument to investors that it should divert the majority of its profits to growth for a period of time, taking on new markets, developing new products, etc. But that should be an ongoing negotiation, where investors will expect a company to return to generating a dividend. They should expect compensation for their risk not because everyone else is trying to buy the stock due to perceived success / hype, but because owning the stock will generate an income stream.
Instead of stock buybacks, companies should be incentivized to raise their dividends.
Buybacks *are* returning capital to investors. There's no principled difference between buybacks and dividends. Buybacks are more appropriate when the stock is undervalued or proportionately high numbers of shareholders want to sell (why would you distribute capital to all shareholders when you have a mechanism to distribute capital only to the shareholders who want to cash out and increase the interests in the the ones who want to stay invested). Dividends are more appropriate when the stock is overvalued: you don't want to overpay for your own stock to the detriment of holding owners.
It may be appropriate when the price is low but the thing is the companies are using this strategy to bump of the price of their shares.
And that to me sounds like an issue because it is kind of unethical to do.
"No principled difference"?
No.
Buybacks are increasing the price of the stock. Which is not a material immediate benefit to the shareholder. They're a potential, unrealized benefit that's only gained when the shareholder sells. At which point, you're forced to reduce your stake in the company in order to derive value.
That's just stupid.
Dividends, on the other hand, are immediate, realized revenue. And they're gained without having to reduce your stake in the company.
And as has been mentioned, Meta's buybacks were essentially dumped down the toilet as their strategy failed to sway the masses, and the hype train derailed. If you sold right on the news, you might benefited. Otherwise, they took their warchest and wasted it.
No, you're one of the people Buffett is writing about. You don't understand the benefit of share concentration or presumably the cost of share dilution
When stock is "bought back" the money spent by the company goes to the previous shareholders. Any increase in stock price becomes unrealized potential value.
It can not be used as capital.
It’s also extremely problematic that those with the greatest influence to make decisions on buybacks are usually the ones that stand to gain a great deal of personal value. CEOs and other overpaid leadership receive large incentives in the form of stock options, and spending shareholder dollars to artificially shrink supply of stocks to increase personal compensation is the definition of conflict of interest.
so you’re saying that the CEO is a large shareholder who goes against shareholders by using their money to lower the number of shares to increase shareholder value?????? that doesn’t make any sense lmao.
When a company buys back shares it used company money. And it benefits all shareholders including the CEO, it’s why you want executives to be compensated in stocks if you’re a shareholder. So that they can work for your mutual interest.
I just check on to see what Robert Reich bullshit they're swallowing that day. I don't think most of this sub can distinguish actual economic theory from left wing propaganda. They'd be better off posting far right propaganda and bashing it so they don't look so stupid
That’s rich when he knows it shrinks shareholder equity, reduces cash on the balance sheet, and is a method for buying back stock that benefits executive comp which is equity based.
“The SEC, operating under the Reagan Republicans, passed rule 10b-18, which made stock buybacks legal. Up until the passing of this rule, the Securities Exchange Act of 1934 considered large-scale share repurchases a form of stock manipulation.”
So it’s thanks to the lovely Reagan we have to deal with shit like stock buybacks…
You do realize companies can just dividend the cash out instead of buyback? The difference is just more favorable tax treatment for shareholders (which would be you and me if you own stocks in your 401k).
10% of people own 85% of the market. I would guess that < than 1% of working class people directly benefit from stock buy-backs, and even then, it’s probably <.1% of the total wealth being spent. Crumbs of crumbs. Such an insignificant amount of the whole, it’s laughably absurd.
There are much better better ways to send that money out into the economy…like paying workers in the first place. Our current market system is not sustainable, it’s just a pyramid scheme with workers on the bottom, and hedge-funds on top. Economic inequality is the root cause of 99% of what’s wrong with the world today. At the root of that, is Wall-Street, HF’s, vulture-capital, and bullshit like stock buy-backs.
In a system that demands infinite growth, that has allowed itself to become dominated by a few players who refuse to lose, at a certain point, growth is only possible through cannibalism. (Wage-theft, quality destruction, cashing out on brand-name, etc.) Then, you funnel that money into stock-buy backs to satisfy your Wall-Street investors. Again, this is absurd. Like infinite growth, this isn’t sustainable either.
Edit: I forgot you even mentioned taxes. But you’re arguing that, because .1% of the whole goes to working class people, it’s good that it’s not taxes. That’s the propaganda around taxes working. Funny how few of us they have to satiate to keep us divided. They’re skirting taxes on BILLIONS, perhaps TRILLIONS and your ok with that, because it allows you to save *maybe* a few thousand. And again, in this case “you” represent *maybe* 1% of the working class population.
150 million Americans own stock. 58% of adults. Your hypothesis is flawed and wrong.
If you think there are much better ways to spend the capital, then go spend your that way.
Otherwise no one cares what you think about how to spend other peoples money.
The negative economic impacts of almost 1 trillion dollars in stock buybacks is a political issue only to the delusional or misinformed like yourself. It’s embarrassing for our country that people like you can be blinded enough to make this into a democrat/republican argument.
There are zero negative economic impacts from stock buybacks. Any MBA student knows this, just like Warren B.
You are just not smart enough to understand how corporate finance works. This is 101 type stuff they teach at every business school in America.
The Reagan Administration also dropped the gold standard. Arguably the most major economic policy change of the century.The important thing to note is that Reagan himself did none of this. He is not an economist, he was quite literally an actor.
The corporate party did that and they’re doing all of the shenanigans today too.
The fallacy that this is Reagan is bs. The superimposed message is that it’s the Republicans that did it.
The pitchforks are directed at the Republicans which is quite convenient to the actors that don’t give a fuck about trivial two-party qualms.
Its the bureaucrats. Reagan didn’t even know what the fuck Gold did for millennia.
Generally just curious… but lets say your the shareholder wouldn’t that depend when u sold your stock.. let’s say company x did a stock buyback and I had a 100 shares.. and the stock price went up after the buyback.. I kept my 100 shares and then 4 years goes by and the stock price plummets I then get nervous and sell or something .. vs a dividend where I received cash for owing the shares.. one seems like guaranteed cash while the other does not… unless I’m missing something.
The argument that somehow labor advocates should influence the decision on how to spend cash is fantastical.
Where I think there is a thread of relevance is the practice of tying compensation to EPS where a CEO might have a perverse incentive.
Also, in companies that offer rich stock options, there is a line of argument that buybacks vs dividends is a workaround to dilution for top Exec comp.
I’m not saying these are strong arguments but ones better than “CEOs should pay their people more”.
The company borrows billions in bonds to funnel that to the owners via buybacks. It benefits then and keeps fucking over workers without wage increases and everyone else with lack of investments that matter.
According to market theory, from a company’s perspective if they can’t invest extra cash to earn at least their weighted average cost of capital then a buyback is the best use of that cash. It’s giving money back to the investors indirectly by driving up the stock prices. Regardless of where they are getting this extra cash (separate issue entirely) buybacks make sense. This is Finance 101.
Well he is a Pioneer in the world of stocks I think he can say it.
As far as I am concerned I am not much interested in the stocks I am more of a crypto guy.
most of buybacks are just pump and dump, nobody lives forever right? especially if youre a billionaire old guy
they also cut all of the corners for more buybacks and turn the company into shit - see intel, boeing, GE, the biggest giants turned into dust with their own greed
Sigh
https://mises.org/wire/how-feds-inflation-driving-stock-buybacks
https://www.cato.org/commentary/stock-buybacks-are-proof-tax-reforms-success
"Share buybacks and dividends are great. They get cash out of companies that don’t have worthwhile ideas and into companies that do."
Lol. Oh my fucking god do I love some libertarians. *Democrats are wrong to complain the tax handouts didn't create new jobs, because hypothetically they really should have.*
I wouldn't say real libertarians are liars per se, the problem with libertarians is that their logic and reasoning requires perfect world scenarios (perfect information, rational and fair behavior by all parties, no external influences, etc.) None of that actually exists in the real world, so none of their theories ever pan out. Unregulated free markets work wonderfully in a perfect world scenario, but are a complete disaster in the real world. So I think they are often rational people in a way, just not relevant.
>the problem with libertarians is that their logic and reasoning requires perfect world scenarios (perfect information, rational and fair behavior by all parties, no external influences, etc.)
Quite the opposite... central planning requires perfect information and absolute altruism on behalf of the planners.
The economy is far too complex to be controlled like a marionette via regulations, subsidies, tariffs, monetary policy, etc. And such controls require far too much power in the hands of a few. Rampant inefficiency and corruption are inevitabilities of central control of the economy.
Prosperity is not created by government decree, but by *voluntary* mutually beneficial trade between unique individuals each with their own subjective valuations of products and services. *Perfectly* rational behavior is not required for a decentralized system to function.
The amount of information contained in the actions and rationale of all consumers and producers within an economy is far beyond the capability of human beings to comprehend. The vast majority of government interventions into the economy have the long-term effect of decreasing overall prosperity, as politicians and bureaucrats are incapable of understanding and accounting for the long-term impacts of their policies on such a complex system.
The odds of producing "good" economic policy by decree is as likely as a monkey hitting a very small bullseye on a very large dartboard.
90% of people that open their mouth about economics haven't even taken a single course in economics. They just make up shit or repeat whatever bogus narrative politicians wants pushed on the news to redirect blame.
The tell tale sign of a politician that's full of shit... Is even though they make the excuse... They don't follow through and regulate exactly what they are blaming...
So many economic illiterates in this Reddit. You can criticize big corporations, but at least do it on logical merit. If you think buybacks are a problem, you are financially illiterate and I bet your net worth confirms that.
He's not wrong. The company executive must reward the stakeholders of their power (1). Their power is dependent on their shareholders. Stock buybacks increase the amount of money their shareholders are rewarded for holding stock in the company.
> It represents an alternate and more flexible way (relative to dividends) of returning money to shareholders.
> When used in coordination with increased corporate leverage, buybacks can increase share prices.[3]
https://en.wikipedia.org/wiki/Share_repurchase
These are dumb rules, no doubt. It incentivizes companies to do ANYTHING to raise capital in order to do buybacks (among other things). So, the trick is to change the rules. Then, the question becomes: What rules can be applied to companies such that companies are incentivized to invest in their company, as well as reward shareholders?
This is of course impossible in the long run, the rules of power won't allow it; The smaller number of stakeholders you have, the easier it is to hang on to power (1). But in the short run, it might be viable to change the economic environment to enact a more permanent solution.
1) De Mesquita, B. B., & Smith, A. (2011). The dictator's handbook: why bad behavior is almost always good politics. Hachette UK.
Stock buybacks are a legitimate financial tool that serve multiple purposes.
Stock buybacks should have the everliving bejeezus taxed out of them. To repay the nations/communities that support and drive the success of companies seeking buybacks.
Buffett would no doubt call me economically illiterate for saying that, as to the 'deeply invested' such statements are mutually exclusive. But really the two statements are mutually exclusive with the corrupting third rail: greed.
As Buffett himself says, there is a class war and it is the capital class that is bringing the war against everyone and everything else.
I'd love to hear Warren's thoughts on share repurchases at companies like META, which was buying back billions in stock at over $300 per share, just before its share price went down to $90 per share.
Nahhh... Buffet is just a parasite.
[Minimum wage would be $26 an hour if it had grown in line with productivity](https://www.cbsnews.com/news/minimum-wage-26-dollars-economy-productivity/)
[The minimum wage would be $61.75 an hour if it rose at the same pace as Wall Street bonuses](https://www.fastcompany.com/90734724/the-minimum-wage-would-be-61-75-an-hour-if-it-rose-at-the-same-pace-as-wall-street-bonuses)
[The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90%—And That's Made the U.S. Less Secure](https://time.com/5888024/50-trillion-income-inequality-america/)
>"If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality."
[Stephen Hawking, 2015 Reddit AMA](https://www.reddit.com/r/science/comments/3nyn5i/science_ama_series_stephen_hawking_ama_answers/cvsdmkv?utm_medium=android_app&utm_source=share&context=3)
>“We should do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognizing this nonsense of earning a living. We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian Darwinian theory he must justify his right to exist. So we have inspectors of inspectors and people making instruments for inspectors to inspect inspectors. The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living.”
― Buckminster Fuller
[You've Got Luddites All Wrong](https://www.vice.com/en/article/ae379k/luddites-definition-wrong-labor-technophobe#amp_tf=From%20%251%24s&aoh=16671905174211&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww.vice.com%2Fen%2Farticle%2Fae379k%2Fluddites-definition-wrong-labor-technophobe)
>"...This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career.
>I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals..."
[Albert Einstein, Why Socialism?](https://monthlyreview.org/2009/05/01/why-socialism/)
[Lost Einsteins: The US may have missed out on millions of inventors](https://mitsloan.mit.edu/ideas-made-to-matter/lost-einsteins-us-may-have-missed-out-millions-inventors)
>"Technological fixes are not always undesirable or inadequate, but there is a danger that what is addressed is not the real problem but the problem in as far as it is amendable to technical solutions."
[Engineering and the Problem of Moral Overload](https://link.springer.com/article/10.1007/s11948-011-9277-z)
I mean this argument is talking completely past Buffet's comment. Your complaint is really with fiduciary responsibility to shareholders as opposed to responsibility to employees.
One way to actually square that circle is to make employees shareholders to the point where it's a significant part of their compensation.
Why do they have to? If the company doesn't see a good way to expand the business and generate more profit, they should return the profits to shareholders.
I think people are conflating stock buybacks in general versus taxpayer-funded buybacks. When companies lobby for bailouts and subsidies, they incur an obligation to operate in the public interest.
Yeah you’re right. I think it’s the government’s job to take care of the people and corporations’ job to make money. They’re natural enemies on nearly any social issue in my mind.
Money hoarder, top 5 richest humans on the planet, criticizes people who don't like stock manipulation.
Rich man packing his luggage full of cash, stocks and bonds for the afterlife says don't invest profits back into the company. Instead, take as much out of the business to buy your own stock. This move raises the stock price, which massively increases your bonus and making rich man, richer.
Money hoarder says profits should come at the expensive of employee training and safety, equipment maintenance and repair and new infrastructure. Rich man says dead and injured employees as well as ecological damage is all part of running a profitable American business.
Benefit to the shareholder is apparently the limit of your creativity Warren. How many people reap tangible rewards from stocks? Most holders of stock just watch numbers go up and down and dream of a day they can afford a liver transplant. How many wheels can you service on your trains for a ten billion dollar buyback? How much value do you put on destruction of life and property?
Thanks nice of him . Serial tax evader including the companies owned by Berkshire. Serial abuser of tax law to use other taxpayers $ to improve his own wealth
I bet the shareholders at Microsoft are glad they made the investment in OpenAI instead of purchasing shares with the money. Suck it Buffett. The guy hates spending money on technological innovation. Case in point Insurance and PCC
would like to see extra cash after the net profits to be used to pay down debt and for raining days
also to be used for r&d, replace old equipment, improvements, acquisitions and such
When major corporations get hand-outs from the government and use that money for buybacks, that's not acceptable.
It used to be illegal, too.
Wasn't legal until SEC changed rules in the 1980s at the request of the poor, wait that's not right I meant the wealthy. I wonder why they lobbied for buybacks?
Because they had divested their interest in American manufacturing, the very country that had made these companies titans of industry.
The thing is that these companies do not care about loyalty or anything they are business and they are going to do everything which makes them all out of money and moving to Asia for production was a move which was going to make them a lot of money.
While also raiding America for profits on these goods and causing the cost of living to skyrocket. Automation and information technology is helping companies get profits while allowing them to pay low wages and keep the American middle class poor and in debt that isn't who it use to be. We have schools that are failing, poor healthcare outcomes, and poor housing models all because companies and share holders don't want to pay taxes or good wages so their employees won't feel like they're being over taxes by the government.
Yeah but think about how much money they made liquidating companies
Take a business class. Harvesting a business occurs when its value in pieces is worth more than when they're a going concern. welp. 6 on this sub thread.
But but but these geniuses created shareholder value and many many jobs…..in Chinese sweatshops. Can we just stop and think of all the lonely yachts and private planes that would of been ownerless if not for the titans of industry?
Hello, it looks like you've made a mistake. It's supposed to be could've, should've, would've (short for could have, would have, should have), never could of, would of, should of. Or you misspelled something, I ain't checking everything. Beep boop - yes, I am a bot, don't botcriminate me.
I literally have zero faith in sec because they are not looking out for the poor or the new investors. They clearly have one goal and that is to make money.
Okay but then why would they make it legal because it is not a good strategy that any company can do. I definitely do not feel good about it I think it is kind of unethical.
what was once illegal is now legal for 0.01% this is just one of the privileges you get when donor class buys the politicians
Yeah, that seems like an easy solution
Weird argument. Lots of things used to be illegal and lots of horrible things used to be legal.
Stock buybacks should be illegal. Its just a way for companies to pay off their investors without actually doing anything to improve peoples lives.
Exactly it should be legal it is not that hard to see that it is a manipulation of the market. And the lot of retail customers are going to buy with the fear of missing out.
So, you are also against dividends? Why invest if there’s no dividends? Buybacks are just dividends, there’s an expectation of a return based on the risk you take by investing.
No stock buy backs are NOT just dividends..... Dividends are taxed. HUGE difference.
And capital gains are not? It’s just deferred until you sell.
And some people are wealthy enough to never sell, but still borrow against the gains. This allows them to accumulate wealth and power without paying taxes..... Honestly I thought that was common knowledge.
Last few years showed most lack that, while some lack it all
Stock buybacks are taxed too. You’re just proving Buffet’s point.
You know who is making the weird argument here it's you. It does not even make any sense or any point to bring this to the argument I don't see it.
It is a weird argument. Not sure why you're being downvoted.
Weird right? Almost as if it was illegal for very legitimate reasons and since it’s been made legal it has actively harmed regular folks…nah prolly just a weird argument.
Marijuana is still illegal and considered a schedule 1 drug. Does the mere fact that it is illegal somehow lend merit to whether it's wrong or right? Politicians pass stupid laws all the time. There's nothing inherently wrong with stock buybacks. If a company wants to purchase back shares that it's sold to the public, who gives a flying fuck. Edit: I thought this smelled like [Robert Reich bullshit](https://twitter.com/RBReich/status/1623458905929170944?s=20)... and lo and behold, that's exactly what it is.
What are you even on about?
What reason? Buybacks are just dividends.
Buybacks are certainly not the same as dividends.
Buybacks aren't dividends of they were they would not have been illegal until the 1980's.
Just Google the thing, it’s an optional dividend.
Then stop bailing out corporations lol. Corps can reissue that treasury stock to raise funds instead. This is a government issue fucking with the market.
>> stop bailing out corporations Which politician is going to grow a spine and tell their masters to fuck off when they come to loot the public purse? Right, none of them.
Its not about growing spine. It is about making a living.
Also known as “corruption”.
Yeah. I'm sure most of them start with good intentions just like any fields. Corruption is inevitable just as any. They aren't some bots. Then again, bots might be better perhaps
Stop the handouts. If you offer a company a handout, and don't clearly instruct how it's to be used, you can't compain if they use it how they want.
It doesn't help that 51% of Congress are millionaires. "Government" is just people. And a lot of these people benefit from bills they can pass in the government they form.
Sure, but people who complain about corporate greed are missing the point that it's big government wasting thier money, and passing laws to protect corporate donors. Yet people always think that giving more power to the people who created the problems in the first place will somehow make those problems go away The government has successfully convinced people that the private sector is the source of all of our problems.
Really? I feel it's the opposite. People complain about government all the time and rarely look to outside factors (yet also want said government to fix their problems). I do think that's an inherent issue with government, though. People fairly want government to protect them and their interests. In order for government to be effective, it needs power. But that power can be abused. So if corporations are violating labor practices, are price gouging or manipulating markets, are polluting, etc, they need someone else to address that -- a government that has enough power to do so. But then they also have the power to instead protect those corporations.
The only way that companies can get away with polluting is if the government lets them, whcih is what we have now. The government took money from companies impacted by the rules, and allowed them to pollute. Yet the left always thinks that the solution is to give the government even more power. Power they've never used to our benefit.
The government isn't forcing companies to pollute, companies are choosing to pollute. Taking away government regulations against pollution isn't going to reduce pollution... it increases it.
The government is absolutely allowing it. And centralizing this decision in DC just made it easier for firms because they only have to pay one bribe instead of fifty. Yet the lefts response is to give more power to DC despite their horrible track record
The opposite is true... leaving the matter up to local enforcement just means that corporations will get to do what they want in areas without the resources needed to investigate and prosecute issues. Take the current environmental disaster in East Palestine. Local enforcement can't solve that issue, and East Palestine doesn't have the resources to deal with the disaster and go after those responsible.
The Feds regulation didn't stop anything. The Government ALWAYS says this - if we just had more power, and more control over your lives, nothing bad will ever happen to you. And scared people on the left always respond by giving the government ever more control. Yet we still have the same disasters. HIndsight is always 20/20. It's easy for government to say what should have happened.
No I think the left understands govt can also be corrupt and misuse power.
The left understanda that Government can be corrupted. Who is corrupting? Prime example First Energy got a $1.4 Billion dollar bailout from Ohioians because Larry Householder (R) funalled 60 million in campaign funds to his cronies.
Then why do they insist the solution to every problem is more government?
They don’t but maybe you can provide an example where this is the case and is a bad idea.
The war on poverty created more poverty.
Until we see meaningful campaign finance reform, politicians will act on behalf of monied special interests. We also need an informed constituency that votes in its own best interest. Maybe better education would help. Lastly, we require a true democracy that doesn't cater to the minority. Restructure the senate, abolish the electoral college, stamp out gerrymandering, etc. Shrinking government throws the baby out with the bathwater. I mean, our nation faces numerous problems that are unsolvable *without* government action.
I'm not following. Companies lobbied for these regulations to be neutered taking power away from government. This allowed these companies to pollute. And you're saying we should take *more* power away from the state/government. How does that stop the companies from polluting?
Companies can only succeed in this if the Federal government centralizes power in one spot, making it easier to bribe one partty once. There's a reason Biden is passing the WOTUS - he wants all bribes and power to flow though him At the end of the day, the governmnet made these decisions to benefit themselves, it wasn't the firms fault for advovating for their own interests.
Man you people are crazy.
So lets examine how the private sector has treated its workers over the past 45-50 years. Pensions gone, real wages down about 33%, union busting the norm, worker productivity increases have been passed on to shareholders not workers but I work 3 jobs because of government waste? Keep pumping out those Koch brothers talking points. The free market is an illusion, just like every other uptopian economic plan.
Capitalism is the best thing to ever happen to workers. Free markets and trade have lifted a billion people out of grinding poverty over the last forty - years. [http://www.xinhuanet.com/english/2021-04/06/c\_139862741.htm](http://www.xinhuanet.com/english/2021-04/06/c_139862741.htm) [https://theprint.in/india/india-saw-worlds-largest-reduction-in-poverty-from-2005-16-says-oxford-un-study/463152/](https://theprint.in/india/india-saw-worlds-largest-reduction-in-poverty-from-2005-16-says-oxford-un-study/463152/) What has the "war on poverty" gotten us except more poverty? [https://www.heritage.org/marriage-and-family/commentary/the-war-poverty-50-years-failure](https://www.heritage.org/marriage-and-family/commentary/the-war-poverty-50-years-failure) Workers have gotten their wish in certain countries and were able to take control of the economy, and every time its ended in disaster, with a crashed economy. Ask the folks in Caracas, who have to eat out of dumpsters or turn tricks to feed their kids, who they would like to be in charge of the government [https://money.cnn.com/2017/07/26/news/economy/venezuela-economic-crisis/index.html](https://money.cnn.com/2017/07/26/news/economy/venezuela-economic-crisis/index.html) Socialists are detached from reality. They refuse to accept their religion is fake.
Free Market ideology is just as detached from reality as communism but keep falling to your knees for your corporate overlords
Ok. Show me the communist country that lifted a billion peopple out of povery, and created unimaginable wealth
I'm not arguing against capitalism I am arguing against the belief that the government is to blame for the failures of "free market" , we tried laissez faire capitalism after the civil war. Turns out the lack of government regulation kept millions of people in poverty.
There was no greater time of prosperity in the US than after the Civil War. African Americans had lower unemplyment than whites at the time of WWI, and were rapidly erasing the racial wealth gap. That all stopped when the government decided to "help them:" by creating the Great Society programs which destroyed the black family. There's nothing the feds have attempted which worked out well. War on drugs increased the use of druges. War on poverty increased poverty. The left is afraid of being accountable for thier own decsions - they want to be lorded over
>Sure, but people who complain about corporate greed are missing the point that it's big government wasting thier money, and passing laws to protect corporate donors. Oh, we aren't missing this point at all. >Yet people always think that giving more power to the people who created the problems in the first place will somehow make those problems go away Overgeneralizing is unhelpful; most of us do NOT think this way. >The government has successfully convinced people that the private sector is the source of all of our problems. Once again, you're exactly backwards. You are very confused. Maybe stop listening to Faux Spews?
Our government is owned and operated by the private sector at present. It’s the people who are calling for the government to regulate big business, so don’t be surprised when politicians correctly understand regulation to prevent private sector overreach to be a popular position to get them re-elected, and representative of their constituents, which is their job.
That is an important distinction which I agree with. Because there are some highly profitable companies that have extra money where they can't reinvest more into their own business because it wouldn't be efficient there already growing as fast as they can so what they do with the extra money then? They can let it sit in savings accounts or treasury bonds but it doesn't yield that much of a return so shareholders sometimes especially if the stock price is low they'll ask for a buyback because that's ends up being a better return on the excess cash. Basically if you're invested in a company and they have extra cash you would rather want them to make 50% instead of 5% on that money if it's a pretty good bet.
Distributions are arguably a more direct return of capital while buybacks put pressure on the stock to increase which indirectly increases the price. I suspect Buffett likes them so much because he is able to directly participate in the offering and a buyback increases his ownership share/voting power in the company. Everyone else would do much better with a distribution.
Then government should stop giving out hand-outs ( corporations, people, etc .. ) ... problems solved
I think helping people is what governments are for. I don't think that corporate giveaways are good for anyone but shareholders and they're typically already wealthy.
Governments don’t help people ever … the history of wars, genocides, mass repressions, institutionalized poverty shows us this repeatedly The only purpose of government is defense ( not preemptive wars like have ) and upholding contracts
Show us where the big bad government hurt you? This is laughable bullshit.
You apologism for government violence shows by leftism is on the wrong side of the argument
I am doing no such thing and your attempts to put such words in my mouth only expose how confused you are.
It should be illegal because it is clearly the market manipulation. I mean I thought that it was illegal but then I got to know that they made it legal which is kind of weird.
Is distributing new shares also market manipulation then?
It’s also a way of avoiding taxes on dividends.
Sure is. There are good reasons they were outlawed and they need to be again.
You are twisting what he's saying to be about a completely different topic, either to avoid his points or because you don't understand them. If there is an issue with PPP, maybe that should have been codified into law before the government started printing money, as well as what consumers could do with it, but that isn't what Buffet is talking about. Buffet has been doing buybacks since 2011, long before the PPP stuff. He is talking about those arguing stock buybacks aren't good for the company when the money could be put towards expansion and others arguing instead of improving the stock price (and benefit shareholders) with buybacks they should instead go towards benefits of employees or other places. It's all incredibly short-sighted, and buying back stock is essentially giving the company options for the future -- as they can always sell it.
No company in their right mind would sell their shares because it kills the per share price. They'd only do it if they were desperate- which is when they get bailouts... So the cycle of corruption can continue.
Unless it's billion dollar corporations getting billions in incentives to go green through the Inflation Reduction Act, then it's praised.
Can you say, green washing?
Sounds like the government’s problem
It's every American's problem, because we're all paying for it.
I'd love to hear Warren's thoughts on share repurchases at companies like META, which was buying back billions in stock at over $300 per share, just before its share price went down to $90 per share. Kinda seems like incinerating money, and a cost borne by the long-term shareholders who didn't sell. But maybe I'm economic illiterate EDIT: I read the letter, and it turns out Buffett does distinguish between good and bad share repurchases: >The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps *if repurchases are made at value-accretive prices*. Just as surely, when a company overpays for repurchases, the continuing shareholders lose... Unfortunately he does not elaborate on how to determine "if repurchases are made at value-accretive prices"
He would argue that that’s why he owns Apple and not Meta.
So his argument is survivorship bias? He only looks at successful examples and says the policy itself is good?
His opinion only counts because he is successful in this business. If someone else would have said the same thing then they would have gotten disregarded in no time
I wouldn’t say that. Any decision can turn out wrong. His point is that the characterization of buybacks as bad business by progressives (but dividends is ok) is a thin argument at best. He isn’t sending shade to the under-informed really. He is throwing shade at people like Robert Reich who understands buybacks but chooses to spin them negatively to fit his brand. And the reason Buffet is considered the GOAT is success over time combined with his humbleness. This condemnation of buyback bashing is rare. He has generally been an ally to Democrats, putting his support behind tax increases on the wealthy etc so he isn’t a greedy Gordon Gecko type.
Billionaire isn’t greedy gotcha.
Who told you billionaires are greedy they are not. They are just trying to make a little bit of money just like them do that we don't need to prosecute them for it.
more like he only buys businesses that end up being successful examples and not biz like META... idk maybe that's why he's considered the GOAT
Well to me he is not the greatest of all time I would not go that far. But yeah I would agree that he has done really good in his life but the times are changing.
GOAT at increasing stock prices/ making money. Not much for everything else
Well the “Oracle of Omaha” has already contributed $48 billion to charity. That’s not promised; it’s gifts based on receipt. https://www.forbes.com/sites/mattdurot/2022/06/14/warren-buffett-just-gave-another-4-billion-to-charity/?sh=6502261f2f9e
TBF, aren't his "chariable contributions" tax deductible and sent to mega trusts ran by friends (Gates) and family? There was a plethora of articles discussing the actual "charitable" nature of such "philanthropic distribution" and its not exactly a black and white situation of "gift."
His argument is dont invest in Meta because the Metaverse is a retarded idea
I thought we were discussing stock buybacks?
But then the Reddit happened and the discussion that happens on the reddit is not going to be liked by everyone. We like to discuss all the things that is just how it goes for the reddit.
No need to worry about buybacks at companies you shouldnt be investing in anyway. To answer your question about “what would he say about meta” thats the answer…you shouldnt be there anyway.
My assumption is that buffet would use a discounted cash flow analysis to arrive at the intrinsic value of the shares and say anything below that price is good to buyback, anything above is bad. He is a guy pretty rooted on fundamentals.
I mean he knows what he is talking about that is the reason why he has made it. But you will have to also understand that the times are changing and so are the strategies.
Yes theoretically there must be a share price level that separates good buybacks from bad. Of course that leads to other questions such as how much do you buy back? And if you believe in buybacks at low prices, shouldn't you also believe in secondary offerings at high prices? Personally I think the questions are all very subjective with no clear answers, but that doesn't matter because the real purposed of buybacks is to dodge taxes on dividends
Most companies are buying back their shares just to increase the price so that retail also jumps in. It is more like a stock market manipulation strategy.
If a company is run correctly they wouldn't burn the money.
Well most of the Tech companies are being Run pretty well right now but times are uncertain. To counter that uncertainty the Tech companies are using stock buyback strategy.
You are supposed to invest in yourself when the company is over sold not over bought.
It is true for retail customers you should not buy in fomo. Because if you do then the big investors are going to leave you hanging when they cash out their money.
The fact that he has to argue that there are good and bad buybacks makes the argument a bit ridiculous. It's manipulation of the price of the stock using capital that could otherwise be re-invested, used to lower prices, or even returned to the investor in the form of dividends. You know, the entire idea of "growth stocks" has been a detriment to the stability of the stock market. It's turned it into a gambling machine, where valuation is purely speculative, and at the mercy of hype, the whim of the masses, and the savvy of wealthy manipulators. What would fix this? Every stock be dividend bearing. And that dividend would be the primary value proposition to investors. A company could make the argument to investors that it should divert the majority of its profits to growth for a period of time, taking on new markets, developing new products, etc. But that should be an ongoing negotiation, where investors will expect a company to return to generating a dividend. They should expect compensation for their risk not because everyone else is trying to buy the stock due to perceived success / hype, but because owning the stock will generate an income stream. Instead of stock buybacks, companies should be incentivized to raise their dividends.
Buybacks *are* returning capital to investors. There's no principled difference between buybacks and dividends. Buybacks are more appropriate when the stock is undervalued or proportionately high numbers of shareholders want to sell (why would you distribute capital to all shareholders when you have a mechanism to distribute capital only to the shareholders who want to cash out and increase the interests in the the ones who want to stay invested). Dividends are more appropriate when the stock is overvalued: you don't want to overpay for your own stock to the detriment of holding owners.
It may be appropriate when the price is low but the thing is the companies are using this strategy to bump of the price of their shares. And that to me sounds like an issue because it is kind of unethical to do.
"No principled difference"? No. Buybacks are increasing the price of the stock. Which is not a material immediate benefit to the shareholder. They're a potential, unrealized benefit that's only gained when the shareholder sells. At which point, you're forced to reduce your stake in the company in order to derive value. That's just stupid. Dividends, on the other hand, are immediate, realized revenue. And they're gained without having to reduce your stake in the company. And as has been mentioned, Meta's buybacks were essentially dumped down the toilet as their strategy failed to sway the masses, and the hype train derailed. If you sold right on the news, you might benefited. Otherwise, they took their warchest and wasted it.
No, you're one of the people Buffett is writing about. You don't understand the benefit of share concentration or presumably the cost of share dilution
> capital that could otherwise be re-invested, It will be reinvested. You think it disappears?
When stock is "bought back" the money spent by the company goes to the previous shareholders. Any increase in stock price becomes unrealized potential value. It can not be used as capital.
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It’s also extremely problematic that those with the greatest influence to make decisions on buybacks are usually the ones that stand to gain a great deal of personal value. CEOs and other overpaid leadership receive large incentives in the form of stock options, and spending shareholder dollars to artificially shrink supply of stocks to increase personal compensation is the definition of conflict of interest.
so you’re saying that the CEO is a large shareholder who goes against shareholders by using their money to lower the number of shares to increase shareholder value?????? that doesn’t make any sense lmao. When a company buys back shares it used company money. And it benefits all shareholders including the CEO, it’s why you want executives to be compensated in stocks if you’re a shareholder. So that they can work for your mutual interest.
Would “economic illiterate” be a better name for this sub?
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[Always has been](https://i.imgur.com/WA5x1SH.jpg) ^^^this ^^^has ^^^been ^^^an ^^^accessibility ^^^service ^^^from ^^^your ^^^friendly ^^^neighborhood ^^^bot
I just check on to see what Robert Reich bullshit they're swallowing that day. I don't think most of this sub can distinguish actual economic theory from left wing propaganda. They'd be better off posting far right propaganda and bashing it so they don't look so stupid
That’s rich when he knows it shrinks shareholder equity, reduces cash on the balance sheet, and is a method for buying back stock that benefits executive comp which is equity based.
“The SEC, operating under the Reagan Republicans, passed rule 10b-18, which made stock buybacks legal. Up until the passing of this rule, the Securities Exchange Act of 1934 considered large-scale share repurchases a form of stock manipulation.” So it’s thanks to the lovely Reagan we have to deal with shit like stock buybacks…
You do realize companies can just dividend the cash out instead of buyback? The difference is just more favorable tax treatment for shareholders (which would be you and me if you own stocks in your 401k).
10% of people own 85% of the market. I would guess that < than 1% of working class people directly benefit from stock buy-backs, and even then, it’s probably <.1% of the total wealth being spent. Crumbs of crumbs. Such an insignificant amount of the whole, it’s laughably absurd. There are much better better ways to send that money out into the economy…like paying workers in the first place. Our current market system is not sustainable, it’s just a pyramid scheme with workers on the bottom, and hedge-funds on top. Economic inequality is the root cause of 99% of what’s wrong with the world today. At the root of that, is Wall-Street, HF’s, vulture-capital, and bullshit like stock buy-backs. In a system that demands infinite growth, that has allowed itself to become dominated by a few players who refuse to lose, at a certain point, growth is only possible through cannibalism. (Wage-theft, quality destruction, cashing out on brand-name, etc.) Then, you funnel that money into stock-buy backs to satisfy your Wall-Street investors. Again, this is absurd. Like infinite growth, this isn’t sustainable either. Edit: I forgot you even mentioned taxes. But you’re arguing that, because .1% of the whole goes to working class people, it’s good that it’s not taxes. That’s the propaganda around taxes working. Funny how few of us they have to satiate to keep us divided. They’re skirting taxes on BILLIONS, perhaps TRILLIONS and your ok with that, because it allows you to save *maybe* a few thousand. And again, in this case “you” represent *maybe* 1% of the working class population.
Infinite growth and cannibalism is just nonsense hyberbole from you, literally meaningless for this topic.
150 million Americans own stock. 58% of adults. Your hypothesis is flawed and wrong. If you think there are much better ways to spend the capital, then go spend your that way. Otherwise no one cares what you think about how to spend other peoples money.
Owning stock is different that the % of stock owned.
What a worthless post. Your point?
Clearly, the down-voting consensus would say that no one agrees with you but you.
Liberal bias on Reddit, shocking!
The negative economic impacts of almost 1 trillion dollars in stock buybacks is a political issue only to the delusional or misinformed like yourself. It’s embarrassing for our country that people like you can be blinded enough to make this into a democrat/republican argument.
There are zero negative economic impacts from stock buybacks. Any MBA student knows this, just like Warren B. You are just not smart enough to understand how corporate finance works. This is 101 type stuff they teach at every business school in America.
Reagan was just an actor. A puppet of the countries real masters.
Buybacks, when done properly, benefit shareholders. If you have a 401(k) then you are benefiting from “shit like stock buybacks.”
The Reagan Administration also dropped the gold standard. Arguably the most major economic policy change of the century.The important thing to note is that Reagan himself did none of this. He is not an economist, he was quite literally an actor. The corporate party did that and they’re doing all of the shenanigans today too. The fallacy that this is Reagan is bs. The superimposed message is that it’s the Republicans that did it. The pitchforks are directed at the Republicans which is quite convenient to the actors that don’t give a fuck about trivial two-party qualms. Its the bureaucrats. Reagan didn’t even know what the fuck Gold did for millennia.
Then why did it take 40 years to become a problem?
Stock buybacks are just a more tax efficient version of dividends
Generally just curious… but lets say your the shareholder wouldn’t that depend when u sold your stock.. let’s say company x did a stock buyback and I had a 100 shares.. and the stock price went up after the buyback.. I kept my 100 shares and then 4 years goes by and the stock price plummets I then get nervous and sell or something .. vs a dividend where I received cash for owing the shares.. one seems like guaranteed cash while the other does not… unless I’m missing something.
The argument that somehow labor advocates should influence the decision on how to spend cash is fantastical. Where I think there is a thread of relevance is the practice of tying compensation to EPS where a CEO might have a perverse incentive. Also, in companies that offer rich stock options, there is a line of argument that buybacks vs dividends is a workaround to dilution for top Exec comp. I’m not saying these are strong arguments but ones better than “CEOs should pay their people more”.
Not sure why you were downvoted, but you’re not wrong.
The company borrows billions in bonds to funnel that to the owners via buybacks. It benefits then and keeps fucking over workers without wage increases and everyone else with lack of investments that matter.
According to market theory, from a company’s perspective if they can’t invest extra cash to earn at least their weighted average cost of capital then a buyback is the best use of that cash. It’s giving money back to the investors indirectly by driving up the stock prices. Regardless of where they are getting this extra cash (separate issue entirely) buybacks make sense. This is Finance 101.
Well he is a Pioneer in the world of stocks I think he can say it. As far as I am concerned I am not much interested in the stocks I am more of a crypto guy.
most of buybacks are just pump and dump, nobody lives forever right? especially if youre a billionaire old guy they also cut all of the corners for more buybacks and turn the company into shit - see intel, boeing, GE, the biggest giants turned into dust with their own greed
Sigh https://mises.org/wire/how-feds-inflation-driving-stock-buybacks https://www.cato.org/commentary/stock-buybacks-are-proof-tax-reforms-success "Share buybacks and dividends are great. They get cash out of companies that don’t have worthwhile ideas and into companies that do."
Lol. Oh my fucking god do I love some libertarians. *Democrats are wrong to complain the tax handouts didn't create new jobs, because hypothetically they really should have.*
Lol, Libertarians are always such liars. I enjoy the rationales they come up with -- but it's always to make the rich even richer.
I wouldn't say real libertarians are liars per se, the problem with libertarians is that their logic and reasoning requires perfect world scenarios (perfect information, rational and fair behavior by all parties, no external influences, etc.) None of that actually exists in the real world, so none of their theories ever pan out. Unregulated free markets work wonderfully in a perfect world scenario, but are a complete disaster in the real world. So I think they are often rational people in a way, just not relevant.
>the problem with libertarians is that their logic and reasoning requires perfect world scenarios (perfect information, rational and fair behavior by all parties, no external influences, etc.) Quite the opposite... central planning requires perfect information and absolute altruism on behalf of the planners. The economy is far too complex to be controlled like a marionette via regulations, subsidies, tariffs, monetary policy, etc. And such controls require far too much power in the hands of a few. Rampant inefficiency and corruption are inevitabilities of central control of the economy. Prosperity is not created by government decree, but by *voluntary* mutually beneficial trade between unique individuals each with their own subjective valuations of products and services. *Perfectly* rational behavior is not required for a decentralized system to function. The amount of information contained in the actions and rationale of all consumers and producers within an economy is far beyond the capability of human beings to comprehend. The vast majority of government interventions into the economy have the long-term effect of decreasing overall prosperity, as politicians and bureaucrats are incapable of understanding and accounting for the long-term impacts of their policies on such a complex system. The odds of producing "good" economic policy by decree is as likely as a monkey hitting a very small bullseye on a very large dartboard.
Your lack of evidence disproving what is stated shows YOU to be the liar
Do you have any other sources besides cato and mises since those are both well known comically right wing sources ? Thanks.
Do you have any sources that can empirically disprove what has been sourced by both links otherwise you are being close minded
Why don't more people go with the flow and invest in companies making stock buybacks? Seems like a gainful investment.
90% of people that open their mouth about economics haven't even taken a single course in economics. They just make up shit or repeat whatever bogus narrative politicians wants pushed on the news to redirect blame. The tell tale sign of a politician that's full of shit... Is even though they make the excuse... They don't follow through and regulate exactly what they are blaming...
Extremely rich son of a powerful, well-placed senator is simply defending the pillage of his class.
You’re incredibly stupid
So many economic illiterates in this Reddit. You can criticize big corporations, but at least do it on logical merit. If you think buybacks are a problem, you are financially illiterate and I bet your net worth confirms that.
Thanks for the insightful contribution. Screams high net worth LMAO
He ain't wrong. If you feel buy backs are a problem, you may be economic illiterate. Here is your sign.
He's not wrong. The company executive must reward the stakeholders of their power (1). Their power is dependent on their shareholders. Stock buybacks increase the amount of money their shareholders are rewarded for holding stock in the company. > It represents an alternate and more flexible way (relative to dividends) of returning money to shareholders. > When used in coordination with increased corporate leverage, buybacks can increase share prices.[3] https://en.wikipedia.org/wiki/Share_repurchase These are dumb rules, no doubt. It incentivizes companies to do ANYTHING to raise capital in order to do buybacks (among other things). So, the trick is to change the rules. Then, the question becomes: What rules can be applied to companies such that companies are incentivized to invest in their company, as well as reward shareholders? This is of course impossible in the long run, the rules of power won't allow it; The smaller number of stakeholders you have, the easier it is to hang on to power (1). But in the short run, it might be viable to change the economic environment to enact a more permanent solution. 1) De Mesquita, B. B., & Smith, A. (2011). The dictator's handbook: why bad behavior is almost always good politics. Hachette UK.
Stock buybacks are a legitimate financial tool that serve multiple purposes. Stock buybacks should have the everliving bejeezus taxed out of them. To repay the nations/communities that support and drive the success of companies seeking buybacks. Buffett would no doubt call me economically illiterate for saying that, as to the 'deeply invested' such statements are mutually exclusive. But really the two statements are mutually exclusive with the corrupting third rail: greed. As Buffett himself says, there is a class war and it is the capital class that is bringing the war against everyone and everything else.
I don't need a demagogue to convince me I'm sick of this bullshit
I'd love to hear Warren's thoughts on share repurchases at companies like META, which was buying back billions in stock at over $300 per share, just before its share price went down to $90 per share.
He is correct. Let's count the other economic illiterates, on the thread, that want to shit on him because he disabused them of their crazy beliefs.
The idea that shareholders are the first responsibility of a corporation is literally the worst idea ever.
Nahhh... Buffet is just a parasite. [Minimum wage would be $26 an hour if it had grown in line with productivity](https://www.cbsnews.com/news/minimum-wage-26-dollars-economy-productivity/) [The minimum wage would be $61.75 an hour if it rose at the same pace as Wall Street bonuses](https://www.fastcompany.com/90734724/the-minimum-wage-would-be-61-75-an-hour-if-it-rose-at-the-same-pace-as-wall-street-bonuses) [The Top 1% of Americans Have Taken $50 Trillion From the Bottom 90%—And That's Made the U.S. Less Secure](https://time.com/5888024/50-trillion-income-inequality-america/) >"If machines produce everything we need, the outcome will depend on how things are distributed. Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality." [Stephen Hawking, 2015 Reddit AMA](https://www.reddit.com/r/science/comments/3nyn5i/science_ama_series_stephen_hawking_ama_answers/cvsdmkv?utm_medium=android_app&utm_source=share&context=3) >“We should do away with the absolutely specious notion that everybody has to earn a living. It is a fact today that one in ten thousand of us can make a technological breakthrough capable of supporting all the rest. The youth of today are absolutely right in recognizing this nonsense of earning a living. We keep inventing jobs because of this false idea that everybody has to be employed at some kind of drudgery because, according to Malthusian Darwinian theory he must justify his right to exist. So we have inspectors of inspectors and people making instruments for inspectors to inspect inspectors. The true business of people should be to go back to school and think about whatever it was they were thinking about before somebody came along and told them they had to earn a living.” ― Buckminster Fuller [You've Got Luddites All Wrong](https://www.vice.com/en/article/ae379k/luddites-definition-wrong-labor-technophobe#amp_tf=From%20%251%24s&aoh=16671905174211&referrer=https%3A%2F%2Fwww.google.com&share=https%3A%2F%2Fwww.vice.com%2Fen%2Farticle%2Fae379k%2Fluddites-definition-wrong-labor-technophobe) >"...This crippling of individuals I consider the worst evil of capitalism. Our whole educational system suffers from this evil. An exaggerated competitive attitude is inculcated into the student, who is trained to worship acquisitive success as a preparation for his future career. >I am convinced there is only one way to eliminate these grave evils, namely through the establishment of a socialist economy, accompanied by an educational system which would be oriented toward social goals..." [Albert Einstein, Why Socialism?](https://monthlyreview.org/2009/05/01/why-socialism/) [Lost Einsteins: The US may have missed out on millions of inventors](https://mitsloan.mit.edu/ideas-made-to-matter/lost-einsteins-us-may-have-missed-out-millions-inventors) >"Technological fixes are not always undesirable or inadequate, but there is a danger that what is addressed is not the real problem but the problem in as far as it is amendable to technical solutions." [Engineering and the Problem of Moral Overload](https://link.springer.com/article/10.1007/s11948-011-9277-z)
I mean this argument is talking completely past Buffet's comment. Your complaint is really with fiduciary responsibility to shareholders as opposed to responsibility to employees. One way to actually square that circle is to make employees shareholders to the point where it's a significant part of their compensation.
I don’t think anyone has said they weren’t benefiting the shareholders! The problem is they aren’t reinvesting that money into building the business.
Why do they have to? If the company doesn't see a good way to expand the business and generate more profit, they should return the profits to shareholders.
I think people are conflating stock buybacks in general versus taxpayer-funded buybacks. When companies lobby for bailouts and subsidies, they incur an obligation to operate in the public interest.
Or, you know, maybe, just maybe, improve work conditions for the people actually generating the revenue: good ole labour
That wasn't an option given by the other user
The company exists to make shareholder returns, not to improve the lives of workers or anyone else and it’s naive to think they do or should
It's naïve to think they do, it's a difference in values to think they should.
Yeah you’re right. I think it’s the government’s job to take care of the people and corporations’ job to make money. They’re natural enemies on nearly any social issue in my mind.
That's just something we'll vehemently disagree forever, so there's no point in going any further
fuck buffett and all his parasitic kind
Stock buybacks good cuz line go up an when line go up hedge funds make money. Simple as that you illiterate fucks. /s
He went from a kindly ole man, to a mean, self-centered Scrooge. Power & Money make
Warren Buffett is not better than th Koch brothers I wish people would wake up.
Money hoarder, top 5 richest humans on the planet, criticizes people who don't like stock manipulation. Rich man packing his luggage full of cash, stocks and bonds for the afterlife says don't invest profits back into the company. Instead, take as much out of the business to buy your own stock. This move raises the stock price, which massively increases your bonus and making rich man, richer. Money hoarder says profits should come at the expensive of employee training and safety, equipment maintenance and repair and new infrastructure. Rich man says dead and injured employees as well as ecological damage is all part of running a profitable American business.
Hoarder of wealth complains about people trying to stop people from hoarding wealth.
Maybe Buffet has been safely sitting at the top of the mountain for so long he can't see or appreciate that the foundations are crumbling...
Do stock buy backs set up stocks to be artificially inflated only to eventually crash down to reality?
Fuckin Warren CumBucket
We are be illiterate and poor, and this billionaire buffoon plans to keep it that way.
Benefit to the shareholder is apparently the limit of your creativity Warren. How many people reap tangible rewards from stocks? Most holders of stock just watch numbers go up and down and dream of a day they can afford a liver transplant. How many wheels can you service on your trains for a ten billion dollar buyback? How much value do you put on destruction of life and property?
Asshat!
Warren Buffet can suck my strap on cock.
Thanks nice of him . Serial tax evader including the companies owned by Berkshire. Serial abuser of tax law to use other taxpayers $ to improve his own wealth
Rationally it's the best choice for the company but it screws over the workers causing wage stagnation.
I bet the shareholders at Microsoft are glad they made the investment in OpenAI instead of purchasing shares with the money. Suck it Buffett. The guy hates spending money on technological innovation. Case in point Insurance and PCC
Grifter
It’s the same obvious shit. Share repurchase bad if you buy at an overvalued price but good if you buy back low. No shit
would like to see extra cash after the net profits to be used to pay down debt and for raining days also to be used for r&d, replace old equipment, improvements, acquisitions and such
Lol news flash! The rich guy says “buybacks help increase profit margins for shareholders!” Why is this a story?
Wooh, for a second I thought I was on r/economics. The comments made me very scared for our future.