Conversation

TIL buybacks were illegal until Reagan SEC appointee John S. R. Shad gave companies so-called safe harbor against charges of manipulation if they bought their stock in the open market under certain circumstances. (The provision is known as Rule 10b-18.) nyti.ms/1Tie5Hl?smid=n
Quote Tweet
Until Reagan, buybacks were illegal. But now they have become the norm, last year exceeding $1 trillion. It is time to rein in this buyback bonanza, and get corporations to invest in workers, not pad their own nests.
Embedded video
2:40
128.3K views
3
116
This Tweet was deleted by the Tweet author. Learn more
Replying to and
Galaxy brain take: stock buybacks are good, shareholder value maximization as a fiduciary duty is good. Both together are a toxic cancer because they become a Goodhart’s-law hack of the reward function. Why bother thinking too hard about how to build value when you can game it.
Replying to and
Actually, add a mod: the toxic combo requires 3rd element: CEOs incentivized to pump and dump. Revolving door culture. Each new CEO pumps and dumps via buybacks, cyclically sucking healthy companies dry. Early death by parasite. Going private is only way to save real value.
2
Show replies