3 ms·

I think part of the problem with buybacks is simply that they are very opaque, even when they are working. With dividends, it is all very nice and tidy: your sh

I think part of the problem with buybacks is simply that they are very opaque, even when they are working. With dividends, it is all very nice and tidy: your shares went down by $X and you got $X/share cash in your account. (Which you might then have had reinvested.) With buybacks... what did that $100B spent do for me, anyway? It is not so blindingly obvious, even if it's there if you look. And so people become skeptical.

rdtsc 2y ago
> With buybacks... what did that $100B spent do for me, anyway? It raised the stock price so now you can sell and make some profit, before others sold and the price went down again. The higher price also makes the company look more credit-worthy, so they could borrow money at a lower rate? And then but more stock ;-)
- exmadscientist 2y ago
  Prove it. No, seriously, that's my argument: prove it, for any given buyback. It's not obvious! Let's pick, totally arbitrarily (I searched "stock buybacks 2016" and this is one of the first things that came up), Disney's 2016 buybacks, totalling $7.5B. Let's say I owned 100 shares of DIS from 2010 to 2019. Make an argument for me that those specific buybacks increased my wealth. (Hopefully by about the per-share value of the buyback, as a dividend would have.) I don't think it's obvious, even if it's true. Which is the problem. The opacity leads to skepticism leads to polemics.
  - rdtsc 2y ago
    > Disney's 2016 buybacks, totalling $7.5B. > Make an argument for me that those specific buybacks increased my wealth. Ok, I see November 25, 2016. https://www.nasdaq.com/articles/disney-stock-history-will-shares-regain-their-magic-2016-11-25 https://www.nasdaq.com/articles/disney-stock-history-will-sh... The "Fool" says DIS is buying back its stock. On November 25 the stock price was $97, 3 months later it was $105. You could have made $800 by selling 3 months later.

rdtsc 2y ago

> With buybacks... what did that $100B spent do for me, anyway? It raised the stock price so now you can sell and make some profit, before others sold and the price went down again. The higher price also makes the company look more credit-worthy, so they could borrow money at a lower rate? And then but more stock ;-)

exmadscientist 2y ago
Prove it. No, seriously, that's my argument: prove it, for any given buyback. It's not obvious! Let's pick, totally arbitrarily (I searched "stock buybacks 2016" and this is one of the first things that came up), Disney's 2016 buybacks, totalling $7.5B. Let's say I owned 100 shares of DIS from 2010 to 2019. Make an argument for me that those specific buybacks increased my wealth. (Hopefully by about the per-share value of the buyback, as a dividend would have.) I don't think it's obvious, even if it's true. Which is the problem. The opacity leads to skepticism leads to polemics.
- rdtsc 2y ago
  > Disney's 2016 buybacks, totalling $7.5B. > Make an argument for me that those specific buybacks increased my wealth. Ok, I see November 25, 2016. https://www.nasdaq.com/articles/disney-stock-history-will-shares-regain-their-magic-2016-11-25 https://www.nasdaq.com/articles/disney-stock-history-will-sh... The "Fool" says DIS is buying back its stock. On November 25 the stock price was $97, 3 months later it was $105. You could have made $800 by selling 3 months later.