Stock buybacks are dangerous for the economy

Re:Stock buybacks are dangerous for the economy by scott_s on Tuesday March 17, 2020 @01:29PM (#22607478)

The value increase caused by the buyback tends to disappear in a year or so. There was a study which found this, but I don’t have a reference on hand.

[ Parent | on HN ]

Re:Stock buybacks are dangerous for the economy by jsight on Tuesday March 17, 2020 @04:45PM (#22610189)

I do not understand why that would happen. Wouldn't they inflate the earnings per share, resulting in a permanently higher share price (all else being equal)?

[ Parent | on HN ]

Re:Stock buybacks are dangerous for the economy by dlp211 on Tuesday March 17, 2020 @05:05PM (#22610415)

If stock price was actually based on pure fundamental analysis, sure. That is not at all reality though.

[ Parent | on HN ]

Re:Stock buybacks are dangerous for the economy by jsight on Tuesday March 17, 2020 @05:08PM (#22610448)

After I wrote that, it occurred to me that there is another counterargument. If cash-on-hand decreases along with the inflation of earnings-per-share, the business value doesn't really increase.

I have always assumed that shareholders wouldn't take this into account, but maybe they deserve more credit than I've been giving them.

[ Parent | on HN ]

Re:Stock buybacks are dangerous for the economy by AznHisoka on Tuesday March 17, 2020 @01:54PM (#22607842)

Which makes sense, because usually the buy back happens during a limited period less than a year.

[ Parent | on HN ]