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You are making a basic mistake. Assuming that the originating company or its interested parties are regular market participants. They are in effect more like t
by hopelite 1y ago
You are making a basic mistake. Assuming that the originating company or its interested parties are regular market participants.
They are in effect more like the guys who stand around a cup and ball scam to make it look like there’s action and winners and keys you think you could do better.
A buyback is a removal of the security from the market, not participation in the market.
It’s like people buying their own books to drive up sales in order to get in lists to promote more book sales, which is when they then supply the market with the books their bought once the price has been artificially elevated and has become sticky.
You may not like hearing that and it’s clearly not the mainstream street preferred narrative, but that’s what it is.
- ta8645 1y agoI don't find anything you said very convincing. You are simply characterizing a transaction as nefarious, and perhaps conspiratorial. Of course, there are incentives and perhaps even misincentives around such sales, but that doesn't mean they are inherently bad. There are mechanisms that are commonly employed to REDUCE the price of the stock, (ie. a stock split), and nobody bats an eye about that. Buying back stocks is a reasonable way to employ cash reserves, and protects the firm from exposure to foreign exchange rate, and inflation risks. I will agree with you that the way executive bonuses are structured can be a perverse incentive that borders on fraud. But blaming the buyback of stocks itself, isn't grounded in any inherent economic misdeed.