Agree.
We need to fix this. I am unsure of how.https://twitter.com/EpsilonTheory/status/1187761326480920577 …
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I don't think it's just a stock buyback problem. Financialization ovee productivity growth is an issue that plagues the entire American economy, even manifesting itself in college majors (economics over engineering).
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How about for starters. Share grants must be struck at the higher of any price paid by Co. for stock buyback in the prior 12 months???
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I kind of feel like we can solve this problem without a law. Once more people become aware of this compensation for management will change. I wouldn't hire anyone who doesn't buy stock with his own money. No options.
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@epsilontheory Buybacks are better taxwise than dividends for shareholders I believe. Capital allocation is the backbone of the US economy. No shareholder wants Sears building another big box store. -
They’re better in a tax sense? Well you pay capital gains later when you sell your stock that assumingly appreciates, as opposed to when you get the dividend. But what if you don’t think the stock has long to run, or god forbid it doesn’t move up after buyback?
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I think there is a valid use for buybacks to manage capital structure according to the business cycle or life cycle of the company. But not as a mechanism to enrich management nearly risk free.
Thanks. Twitter will use this to make your timeline better. UndoUndo
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