Why You Should Be Mad About Stock Buybacks

Companies spent over $1 trillion on stock buybacks last year. Here's why that's terrible for our economy and for you.

You’ve heard the term stock buybacks everywhere this year. In the airline and railroad industry, the oil and gas industry, in entertainment, and in food. But what you haven't heard is whether it''s good or bad -- and why.

#business #businessnews #stockmarket #explained #warrenbuffett
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[AlexanderSkinnerVids]

Railroads: “we can’t afford to pay workers that much more”

Also railroads: *spend billions on buybacks over the past decade*

[nwatson]

And they blame working class people for having debts and not being able to get ahead...the deck is stacked in their favor!

[Theballonist]

When I was 11 years old my dad brought home a stock investing game. I can’t remember the name of it but it was made by a big financial software company. It would take a snapshot of the stock market as it was at the moment you opened it, and then you could play forward with randomly generated future performance.

I was always frustrated playing this as a game because it didn’t have the right gameplay mechanisms, it got super boring doing responsible investing. Then I discovered hostile takeovers and found out I could pay myself dividends. But that would quickly lead to crashed companies and needing to pay bankruptcy debt. But if you instead did stock buybacks slowly, sold shares and used the money to buy other companies, slowly leaching value out, you could easily get out before the company crashes and you had to pay back all the debt.

Our world is essentially being run by 11 year old children.

[joseduarte]

Whenever I hear "this wasn't the case before" I just know that Reagan is to blame

[sevanaiaseeto]

Rules don't apply to those who can buy out governmental bodies and public servants.

[zzulm]

Corporations do this, go bankrupt and ask for bailouts, keeping the profits for themselves and making the people pay to bail them out.

[tonyiommisg]

I love how i can play a guessing game about when a government regulation was undone and if i guess during the Reagan administration, im almost always right.

[BearKat]

I worked at Chevron for 35 years. The last 15+ raises were ~3% every year. And before someone says that was due to performance, I survived 3-4 lay-offs at least, I was a manager/supervisor, and I could go on. Young people, don't let these corporations take advantage of you!

[lite]

To call stock buybacks financial engineering is an insult to engineers. It's self-dealing. That's exactly what it is, and it should be forbidden.

[gingerkilkus]

Biggest lesson i learnt in 2022 in the stock market is that nobody knows what is going to happen next, so practice some humility and follow a strategy with a long term edge.

[writerconsidered]

As long as politicians are bribed by corporations "nothing will fundamentally change."

[Meitti]

CEOs benefitting from stock buybacks is basically encouraging ship captains to take an axe and hack off pieces of a ship to sell them for profit, while the ship is still sailing in the sea.

[AllisonAhrens]

Acquiring stocks is simple, but selecting the right ones without a proven strategy is daunting. With a $160K portfolio, I struggle with identifying optimal entry and exit points. Any advice would be invaluable.

[kevin_andrews]

Businesses don't care about a good product, their customers, or their workers. Their only priority is please their investors.

[Vort_tm]

If you allow people to cheat, some will cheat.

[Elevate]

'Buybacks helped cause the Great Depression, so the government recognized the practice for what it was--Market manipulation'
- Eric Gardner | Business Reporter, More Perfect Union

[HaldaneSmith]

How to do insider trading without being convicted of insider trading: 1) issue lots of stock shares to drive the stock price down; 2) hand out lots of stock options to corporate executives; 3) buy back a lot of stock shares to drive share price up; 4) sell your stock options. Repeat forever.

Apple issued $11 billion in new shares during the same time period they were buying back $2.5 billion in stock. Why do that if you're not manipulating the share price?

It would be interesting to see a graph of stock shares issued, share bought back, stock options issued, and options sold to see the correlations.

[nikolaifinukov]

I made a comment earlier, but I have another solution, , , You can do stock buybacks only if 50% of your buyback goes directly as a split direct paycheck to all your non executive workforce. That rule would work better than a direct ban because it would make executives never even WANT to do it because of how much they hate paying non executive staff.

[duancoviero]

Why tax buybacks? They are just gonna escape the tax anyway, just ban them outright.

[jeanniep]

It’s market manipulation…period! These corporations are manipulating their own stock prices and all other stocks in the market are affected with every buyback purchase. CEOs mission is their own job performance and company stock prices. So they win by artificially increasing corp stock price by using company profits to buyback stocks. This increase makes it look like ceo is doing a good job managing the business, but he’s not because he’s not reinvesting in its product, it’s workers, it’s future. It’s a short-term decision for a CEOs self-interest. And since they bought a bunch a stock, it’s now increasing more so what do they do next, they sell the buybacks at a higher stock price and pocket the earnings so they use company profits to enrich themselves and shareholders.