I'd like to see a book about 8 CEOs who did everything wrong and wound up bankrupting the company. Not a blurb, like these 25[0], but an in-depth, biographical play-by-play. It takes decades to destroy a Blockbuster or Borders and likely there was more than one CEO involved. Decades is a long time to watch a train wreck and keep doing the wrong thing.

[0] https://www.gobankingrates.com/money/business/most-epic-corp...

Take a look at Jim Collins’ How the Mighty Fall. https://www.amazon.com/How-Mighty-Fall-Companies-Never/dp/09...

Yahoo is a case study I think.

A buyback of company shares with company funds drives up the price of all the shares including those of the executives and board members making the decision.

The best (worst) part is: they don't even need to use actual company funds. Thanks to our wonderful (awful) central banks, they can have the company borrow huge amounts of money at almost zero interest.

Outcomes: the company is more leveraged, executives make huge personal profits without doing anything meaningful, central banks observe the increased risk to the system (higher leverage) and decide they must keep rates lower for longer... inducing the cycle to repeat ad nauseam. It's an integral part of the monetary doom loop we're living through.

If we ignore shady deals, that I suppose happen, Central Banks rational for keeping the interest rate low is to facilitate investment in the economy when there is not risk of inflation (the real economy is under-performing). Keeping the interest rate low facilitates lending, that's the point. Hopefully, some of that money will be use for productive investments.

If a company can borrow money it's because the lender (a private bank normally) considers that operation makes business sense (for the lender). It's the company and the lender the responsible parts for that deal, not the central bank.

Yes, that's one of their stated reasons (there are others). But it hasn't worked for a long very time - the net effect is well and truly negative by now.

My view:

Deliberately stoking massive asset price inflation and wealth inequality while preventing wage inflation is a major cause (along with offshoring) of the social and political tension across the developed world.

Our glorious central bankers (with a few honorable exceptions) still believe that this pursuit of the "wealth effect" is the right thing to do, and the benefits of their monetary diarrhoea will eventually trickle down to everyone. It's not happening and it won't happen.

Some governments are waking up and looking at unifying fiscal and monetary policy. Some are even directing where the credit goes. Frankly I think "independent" central banking exists today in name only, and may disappear within 10 years.

So prepare for inflation to return, to "surprise" everyone, and for our central banks to ignore it and keep suppressing rates right up to the bitter end. And when the rates do rise again, all the zombie firms, malinvestment, bezzles, and unpayable debts will float to the surface and we'll have a bigger version of 2008 to deal with. And a pensions crisis to follow.

Well, exchanging cash for an overvalued stock does not drive up prices for long. I have mentioned negative examples above

It only needs to be long enough to sell...

I wonder if there is any measurable impact from share buybacks propping up or raising price which increases market cap which causes index funds to increase their holdings which then also props up or raises the price, etc.

No it doesn't. There are fewer shares in the company, but the company is worse less. There's no good reason to think that in general the remaining shares in a company will be worth more or less after buyback than what they would be worth if the company had simply held onto the money.

Typically, when there is demand the price goes up, the stock price is not hard linked to the company value, it can lag, lead or even temporarily be correct but generally speaking it takes a while for an over or underpriced stock to catch up to the real value, long enough that there are whole industries dedicated to spotting these differences.

They don't know what to do with the money, when there's no R&D anymore.

So why not pay it out as dividends?

Dividends are a forced distribution for the shareholder. With the ability to sell fractional shares, stock buybacks are equivalent to optional dividends.

And friendlier in regards to taxation. Doing a roundtrip of buying more shares with dividends means paying income taxes.

I hear this a lot, but is it really true? For shares of US companies (or foreign companies listed on US exchanges) held for > 60 days before the ex-dividend rate, dividends are taxed at the long-term capital gains rate.[1]

1. https://www.investopedia.com/ask/answers/090415/dividend-inc...

The rate may end up the same in many situations, but it’s still helpful to control the timing on when you pay long term capital gains. With dividends you’re still paying now rather than later, or perhaps never. (There’s no capital gains on donated stock or inherited stock.)

The point is that you pay 0 tax until you sell. That’s better than being forced to pay long term capital gains every year on a dividend.

Do most people reinvest dividends in the same stock? What you say makes sense, but I can also see holding a stock and using the dividends for another use, for example just cash withdrawals or to buy another stock.

I don't know if it's "most people", but basically every dividend stock has a DRIP program that will automatically use your dividends to purchase shares of that stock. It's a very common strategy outside of the frenzied trading encouraged by apps like robinhood.

40% of corporate equity is owned by foreign funds that don't pay US taxes at all (thank you, capital inflows!)

30% of corporate equity is owned by tax advantaged retirement funds

Only 30% of shares are even subject to this tax trade off discussion.

Some would say this is equivalent to "we've got no better ideas, here, see if you can put the capital to work".

Given they are known for expert capital allocation that'd undermine investor confidence.

Another example of good use of share issuance would be AMC. They have been raising a lot of capital during the pandemic through share issuing. Saving their business.

But doesn't he mention how good the gains in apple ownership made by berkshire due to apples' own buyback program and their near future plans to buyback more.

> repurchases when prices have risen

Apple did and planning to the exact thing