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Companies (often ones with business both in and outside the US) generally borrow money to pay for buybacks (Apple as an example). So corporate debt goes up, pai
by coldcode 7y ago
Companies (often ones with business both in and outside the US) generally borrow money to pay for buybacks (Apple as an example). So corporate debt goes up, paid out of future earnings if they exist, to keep the stock price up and keep shareholders happy. But it is not making business value which ultimately is what business exists for and should reflect in the stock price. So the price is propped up for some time period based on distant profits that may never happen, instead of reflecting company value improvements in the more near future.
- christophilus 7y agoApple is probably a bad example, here. It's got more cash than it knows what to do with-- nearly as much cash as debt. And its debt is at a relatively low interest rate. It's arguable that while interest rates are so low, it makes sense to take on a bit more debt than usual, and when interest rates get high, it makes sense to reduce your debt ratios.
- deleted 7y ago[deleted]
- deleted 7y ago[deleted]
- Nokinside 7y agoApple is really bad example. Apple did buyback for a right reason. They are drowning in cash. Their debt is not an issue at all.