3 ms·
that's an argument for why best seller lists are stupid. companies can create new stock anytime out of thin air, and that decreases the price. why can't they d
by pas 3y ago
that's an argument for why best seller lists are stupid.
companies can create new stock anytime out of thin air, and that decreases the price. why can't they do the opposite?
some owners of the company decide to buy stocks from the others, thus consolidating ownership. that's what stock buyback is.
note, the argument for taxing buybacks is completely different, and valid. (and it might make sense, it might not, it depends on the circumstances. externalities tax (pollution, tax on induced traffic, etc), LVT (land value tax) and wealth tax would be much better, than taxing transactions.)
- jmholla 3y ago> companies can create new stock anytime out of thin air, and that decreases the price. why can't they do the opposite? So at any point, a company can devalue existing shares that people have already purchased? That also sounds like a problem.
- pas 3y agosure it can be securities fraud, but usually it's done to attract more investors. companies on stock exchanges usually do stock splits, etc. (and based on bylaws majority or 2/3rs or more of existing owners need to approve.)
- akvadrako 3y agoIf companies couldn't issue stock there wouldn't be a stock market at all.