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Investing in a 401k does not make you a hedge fund manager. Passive investors don't make decisions and do not vote, and thus have no impact on the choices execs

Investing in a 401k does not make you a hedge fund manager. Passive investors don't make decisions and do not vote, and thus have no impact on the choices execs make. Most people just tick a box when they start a new job and never take action on their retirement accounts. The ones who benefit from stock buyback programs are board members and executives who hold large amounts of stock. When they initiate stock buyback programs, their assets spike in price and their wealth grows. It's nefarious to ignore this and point the finger at the people getting screwed over the most by these tactics (the general public).

toasterlovin 6y ago
> The ones who benefit from stock buyback programs are board members and executives This is incorrect. Every single owner of the company benefits in direct proportion to their share of ownership. I think stock buybacks can be a pretty great use of cash. If you like a company that you own, then there's a pretty good chance that you're better off using cash to double down on that bet by concentrating your ownership rather than using cash to acquire another company that you may not be interested in owning. Using cash for acquisitions is the real evil that is being avoided, in my opinion. Acquisitions are where the interests of management most diverge from the interests of the owners. Managers want to be in charge of a larger pie, since it helps them make the case that they should be paid more. Having cash sitting around idle is a continuous temptation to management to give themselves a promotion by using it to buy another company.
- salawat 6y ago
  This is also incorrect. Every single owner who intends to sell, but not yet benefits from stock buybacks. Everyone else long on the stock in the belief the company is actually serving a purpose other than as a vehicle for speculation only gets a momentary bump in share price (which is useless to them) and the heap of new debt/reduced cash reserve as a result of their company having just bought out everyone who wants to jump ship. This creates a company less prepared to weather hard times. Remember, a company represents an organized solution to some sort of societal ill or want. Saying "everyone benefits" skews the optics more than looking through a septuple-Klein bottle filled with a heterogeneous mixture of fluids with wildly different refractory indices. Which is to say, a lot. P.S. It may not be simple to visualize, but multiple different implementations should fit the bill. You can imagine seven nested Klein bottles all interleaved with each other, or seven layered Klein bottles all clearly distinct and separated, but never the less disrupting the path of light at every medium interface.
- viklove 6y ago
  I'm not arguing corps should use the cash for acquisitions instead. They should reserve the cash for hard times, or use it to reward performant employees that they want to retain. Basically anything to increase the long term value of the company, instead of just cashing out for a quick buck at the cost of long-term stability and growth. Instead, most companies use buybacks to spike the price so they (execs and board members) can offload shares and get rich quick. That's unethical and should be punished. At the very least corps that engage in this behavior should not be bailed out when hard times hit.

toasterlovin 6y ago

> The ones who benefit from stock buyback programs are board members and executives This is incorrect. Every single owner of the company benefits in direct proportion to their share of ownership. I think stock buybacks can be a pretty great use of cash. If you like a company that you own, then there's a pretty good chance that you're better off using cash to double down on that bet by concentrating your ownership rather than using cash to acquire another company that you may not be interested in owning. Using cash for acquisitions is the real evil that is being avoided, in my opinion. Acquisitions are where the interests of management most diverge from the interests of the owners. Managers want to be in charge of a larger pie, since it helps them make the case that they should be paid more. Having cash sitting around idle is a continuous temptation to management to give themselves a promotion by using it to buy another company.

salawat 6y ago
This is also incorrect. Every single owner who intends to sell, but not yet benefits from stock buybacks. Everyone else long on the stock in the belief the company is actually serving a purpose other than as a vehicle for speculation only gets a momentary bump in share price (which is useless to them) and the heap of new debt/reduced cash reserve as a result of their company having just bought out everyone who wants to jump ship. This creates a company less prepared to weather hard times. Remember, a company represents an organized solution to some sort of societal ill or want. Saying "everyone benefits" skews the optics more than looking through a septuple-Klein bottle filled with a heterogeneous mixture of fluids with wildly different refractory indices. Which is to say, a lot. P.S. It may not be simple to visualize, but multiple different implementations should fit the bill. You can imagine seven nested Klein bottles all interleaved with each other, or seven layered Klein bottles all clearly distinct and separated, but never the less disrupting the path of light at every medium interface.
viklove 6y ago
I'm not arguing corps should use the cash for acquisitions instead. They should reserve the cash for hard times, or use it to reward performant employees that they want to retain. Basically anything to increase the long term value of the company, instead of just cashing out for a quick buck at the cost of long-term stability and growth. Instead, most companies use buybacks to spike the price so they (execs and board members) can offload shares and get rich quick. That's unethical and should be punished. At the very least corps that engage in this behavior should not be bailed out when hard times hit.