Re:End Stock Buybacks, Save the Economy?
by rishabhparikh on Thursday August 23, 2018 @07:36PM
(#17831514)
You don't exchange any stock when you're paid dividend. If you sold a bit of your holdings each year you would eventually have no equity left.
Do you want to have your cake and eat it too?
The difference is that if the company pays dividends then the stock price will drop because it represents a claim on a smaller amount of assets. So you can achieve exactly the same effect yourself by periodically selling a small percentage of your holdings. It's like having a big piece of a small cake versus a small piece of a big cake: if you get the same amount of cake in the end then who cares how it's shaped.
Re:End Stock Buybacks, Save the Economy?
by philwelch on Thursday August 23, 2018 @08:02PM
(#17831663)
If the dollar value of your holdings appreciates by 7% each year and you sell 4% of your holdings each year (by dollar value), you can keep selling indefinitely. (This is, incidentally, exactly how retirement accounts work.)
Why don't you just sell a bit of your holdings each year, and get this irrevocable return yourself?
And if others don't want to sell and be taxed each year, they can just hold onto their shares (and continue to be subject to market risk).