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if I'm an investor, then i want that the company is making me more tomorrow than today. I cannot eat customer satisfaction. that's how it works.

Invictus0 4y ago
You can eat fat dividends though. I haven't heard any decline in the share buyback program.
Someone 4y ago
Not necessarily. A share that keeps it value and reliably pays out steady dividends just above interest rates still is an attractive investment for some Apple also doesn’t need that many investors at the moment, so why should it care much about what investors want?
- Yujf 4y ago
  Because investors own apple, so apple has to do what investors want. Or more specifically the CEO has to do what investors want otherwise they fire him and find someone else who will do what they want
  - threeseed 4y ago
    > Or more specifically the CEO has to do what investors want otherwise they fire him The board is the one that has the power to fire the CEO not shareholders. And yes shareholders are involved in deciding the composition of the board. But unless there is some egregious governance issue or a complete breakdown in financials no one is going anywhere.
  - Someone 4y ago
    Replacing the head honcho doesn’t guarantee that share prices will start growing rapidly. It’s quite possible that no CEO in the world can accomplish that. Also, as I said, share prices don’t need to go up to make investors happy. for example, the typical pension fund is perfectly happy with an investment that will never win them the jackpot, but also is extremely unlikely to lose them everything, and very likely will regularly pay dividends. So, a majority of Apple’s shareholders may be perfectly happy with the status quo.
deleted 4y ago
[deleted]
dylan604 4y ago
Then don't invest in a company that has an agenda different than yours. You can have a company that is doing fine, investors are not losing money but maybe not making as much as someone else thinks they can. Along comes the activist investors that then start forcing the company to change to meet their exepctations. Is that really how an investment in a company should work rather than someone investing because they think the company is doing the right thing?
briffle 4y ago
Or, you invest in companies with reasonable dividends, instead of just hoping the price always goes up.
- StevePerkins 4y ago
  U.S. tax policy favors capital gains income over dividend income, provided that you're not a short-term trader. People overlook this massive thumb on the scale when pondering the trend toward share buyback programs rather than dividend payments.
  - zucked 4y ago
    Can you explain this more? Is this a recent (~decade) thing? I remember my grandfather investing in companies with a solid dividend as much as share price growth; has something fundamentally changed?
    - StevePerkins 4y ago
      https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States#History https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_Unite... For over a hundred years now, realized gains (i.e. the difference between what you paid for a stock and what you sold it for) have been taxed at different rates depending on how long the investment was held. Over the decades, the definition of "long-term" and it's special treatment has jumped around ALL OVER THE PLACE (i.e. 6 months, 2 years, 10 years, etc). During the Reagan administration (believe it or not), the special treatment for long-term capital gains was abolished. It was brought back around the turn of the century under Clinton (believe it or not). So it's possible that a middle-aged investor during the 1980's and 1990's grew accustomed to the conventions of an era without a long-term capital tax rate. And never adjusted their mindset or investment strategies when the long-term rate returned. However, the 80's and 90's are a historical aberration. Although the definition of "long-term" has been one-year for quite awhile now, the special rates for long-term gains were continuously lowered during the 2000's. So that it's now EXTREMELY more advantageous to accrue long-term capital gains rather than dividend income. Those rate changes have been one driver for recent share buyback programs (the far greater driver has been the availability of cheap money under post-2007 Federal Reserve policy). However, it's worth noting that even the lowest capital gains rate today is higher than when the tax was first introduced.
WFHRenaissance 4y ago
Exactly, as an investor I want the companies I invest in to ultimately eat all of the other companies. If it's not growing, the value of my stock is not growing. This isn't public transportation.
- astrange 4y ago
  As an investor why are you buying individual companies instead of index funds so you don't have to care about that?
  - WFHRenaissance 4y ago
    LOL - because a bundle of companies has a different risk/reward profile? I only bet on high-growth companies. I'm not interested in making money the slow-and-steady way.
lisper 4y ago
> if I'm an investor, then i want that the company is making me more tomorrow than today. That is a very common sentiment, but badly misguided. What you should want as an investor is a good return on your investment. You can't eat customer satisfaction, but you can eat profits and profits can be produced by satisfying customers. In fact, the only thing that should matter to you as a rational investor is the price of the investment relative to the profits you expect the company to make in the future. There is a price at which even a rapidly growing company will no longer produce a good return relative to alternatives, and there is a price at which a company that is profitable but not growing will produce a good return. That is what should matter, not growth per se. The reason people are attracted to growth is that growing companies are priced with a risk premium that produces outsized investments in some cases. But survivorship bias makes investing in a growing company appear more attractive than it actually is. In the long run, the market incorporates all information into the price and regresses to the mean. And growth has all kinds of unpleasant externalities too. It really should not be pursued for its own sake.

Invictus0 4y ago

You can eat fat dividends though. I haven't heard any decline in the share buyback program.

Someone 4y ago

Not necessarily. A share that keeps it value and reliably pays out steady dividends just above interest rates still is an attractive investment for some Apple also doesn’t need that many investors at the moment, so why should it care much about what investors want?

Yujf 4y ago
Because investors own apple, so apple has to do what investors want. Or more specifically the CEO has to do what investors want otherwise they fire him and find someone else who will do what they want
- threeseed 4y ago
  > Or more specifically the CEO has to do what investors want otherwise they fire him The board is the one that has the power to fire the CEO not shareholders. And yes shareholders are involved in deciding the composition of the board. But unless there is some egregious governance issue or a complete breakdown in financials no one is going anywhere.
- Someone 4y ago
  Replacing the head honcho doesn’t guarantee that share prices will start growing rapidly. It’s quite possible that no CEO in the world can accomplish that. Also, as I said, share prices don’t need to go up to make investors happy. for example, the typical pension fund is perfectly happy with an investment that will never win them the jackpot, but also is extremely unlikely to lose them everything, and very likely will regularly pay dividends. So, a majority of Apple’s shareholders may be perfectly happy with the status quo.

deleted 4y ago

[deleted]

dylan604 4y ago

Then don't invest in a company that has an agenda different than yours. You can have a company that is doing fine, investors are not losing money but maybe not making as much as someone else thinks they can. Along comes the activist investors that then start forcing the company to change to meet their exepctations. Is that really how an investment in a company should work rather than someone investing because they think the company is doing the right thing?

briffle 4y ago

Or, you invest in companies with reasonable dividends, instead of just hoping the price always goes up.

StevePerkins 4y ago
U.S. tax policy favors capital gains income over dividend income, provided that you're not a short-term trader. People overlook this massive thumb on the scale when pondering the trend toward share buyback programs rather than dividend payments.
- zucked 4y ago
  Can you explain this more? Is this a recent (~decade) thing? I remember my grandfather investing in companies with a solid dividend as much as share price growth; has something fundamentally changed?
  - StevePerkins 4y ago
    https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_United_States#History https://en.wikipedia.org/wiki/Capital_gains_tax_in_the_Unite... For over a hundred years now, realized gains (i.e. the difference between what you paid for a stock and what you sold it for) have been taxed at different rates depending on how long the investment was held. Over the decades, the definition of "long-term" and it's special treatment has jumped around ALL OVER THE PLACE (i.e. 6 months, 2 years, 10 years, etc). During the Reagan administration (believe it or not), the special treatment for long-term capital gains was abolished. It was brought back around the turn of the century under Clinton (believe it or not). So it's possible that a middle-aged investor during the 1980's and 1990's grew accustomed to the conventions of an era without a long-term capital tax rate. And never adjusted their mindset or investment strategies when the long-term rate returned. However, the 80's and 90's are a historical aberration. Although the definition of "long-term" has been one-year for quite awhile now, the special rates for long-term gains were continuously lowered during the 2000's. So that it's now EXTREMELY more advantageous to accrue long-term capital gains rather than dividend income. Those rate changes have been one driver for recent share buyback programs (the far greater driver has been the availability of cheap money under post-2007 Federal Reserve policy). However, it's worth noting that even the lowest capital gains rate today is higher than when the tax was first introduced.

WFHRenaissance 4y ago

Exactly, as an investor I want the companies I invest in to ultimately eat all of the other companies. If it's not growing, the value of my stock is not growing. This isn't public transportation.

astrange 4y ago
As an investor why are you buying individual companies instead of index funds so you don't have to care about that?
- WFHRenaissance 4y ago
  LOL - because a bundle of companies has a different risk/reward profile? I only bet on high-growth companies. I'm not interested in making money the slow-and-steady way.

lisper 4y ago

> if I'm an investor, then i want that the company is making me more tomorrow than today. That is a very common sentiment, but badly misguided. What you should want as an investor is a good return on your investment. You can't eat customer satisfaction, but you can eat profits and profits can be produced by satisfying customers. In fact, the only thing that should matter to you as a rational investor is the price of the investment relative to the profits you expect the company to make in the future. There is a price at which even a rapidly growing company will no longer produce a good return relative to alternatives, and there is a price at which a company that is profitable but not growing will produce a good return. That is what should matter, not growth per se. The reason people are attracted to growth is that growing companies are priced with a risk premium that produces outsized investments in some cases. But survivorship bias makes investing in a growing company appear more attractive than it actually is. In the long run, the market incorporates all information into the price and regresses to the mean. And growth has all kinds of unpleasant externalities too. It really should not be pursued for its own sake.