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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I think people get that. What they don't get is when they opted out of FooCorp and then FooCorp requires an institutional intervention to save itself, which they then pay for (directly or indirectly). Moral Hazard upsets people. Cash is a drag because security has a price.
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It is, but the last 10 years of American Airlines stock buybacks would cover 4 months of operations. Do they absolutely moral hazard themselves? Yes. Are they a national security requirement? Might be a bit strong, but yes. /Among other things, bankruptcy removes pensions
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The thing which I find most absurd about this is that many of the same people who complain about stock buybacks *also* complain that corporations are hoarding cash and not paying out enough of it as dividends.
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You’ll find that most concerned with buybacks and high cash positions aren’t clamoring for more dividends.
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Ha! People, even a lot of otherwise educated folks, have little understanding of math (including plenty of software engineers.) They can add and subtract, but refuse to think from a mathematical perspective.
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Nobody I meet ever says well "I'm not that good at reading comprehension" but plenty of them say "I'm not that good at math." Illiteracy is looked down upon but not understanding algebra (let alone calculus 101) is perfectly acceptable to many.
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The flip side is that if you're forced to liquidate / sell due to low liquid assets and an inability to borrow then your business value will be massively undervalued as you are in a forced seller situation, especially if it is a wider issue. Cash flow issues kill businesses.
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(Narrator: people do not...) Seriously though, I really think even professional traders struggle with this, as the weight of sentiment and gut feel is a large part of decision making.
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