Buying a stock in the public markets is not a lifelong commitment. You can get off the bus at any moment when you don’t like the ride, generally very cheaply. The people on the bus at any moment are, by and large, the folks in society who most wanted to be there.
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This has a sort of homespun aww shucks feel to it, but it is descriptively accurate and aimed at the homespun aww shucks notion that you’d really want to buy stocks for nice consistent dividends, like a bond with a little bit of upside, but not too much, not enough to ever sell.
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Speaking of aww shucks logic: yes, moving cash reserves off the balance sheet to shareholders does magnify exposure of remaining shareholders to the business’ future prospects, including in bad times. That was a major point of the exercise.
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If you don’t want increased exposure to FooCorp, when FooCorp says “Anybody want out?”, you say yes. Or you use any of the other zillion opportunities in public equities.
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“But what if you’re too inattentive or unsophisticated to make that decision?” Then does the financial industry have a product for you! It has very many, actually, but the one you actually want is an index fund. The equity exposure you want with no decision making necessary.
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End of conversation
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Extending the analogy, I think the people making noise are saying, IF the bus driver gets paid to maximise returns to those who say "Hard Pass", Then the number of people completing their journey on this bus is minimised ( along with their returns)
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Shake out the weak hands
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Great summary. Which brings up the point currently in place of why should the gov get involved and loan money to say
@AmericanAir ? Feels like they could have purchased “pandemic insurance” from an insurer like Buffet.Thanks. Twitter will use this to make your timeline better. UndoUndo
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Doubt the second part. Buybacks happen when corporations have no good investments to make, people getting off are those who think there's better ROI elsewhere. No investments to make usually means low growth low risk / maintenence over innovation.
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I don't get why there is such a pile up against stockbuy backs. The people that profited from them are already gone, and the people that stayed got the brunt of the punishment. Its exactly the opposite of the accusation that they used buybacks to get rich or something.
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