Re:Crypto is an unproductive bubble
by mancerayder on Friday March 18, 2022 @09:38PM
(#30730019)
Buybacks? If you're running a company profitably you're supposed to invest your cash to expand the business, not inflate the share price. The share price is supposed to be a reflection of your future profitability, not your future buyback schemes.
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Buybacks are optimal when your share price is undervalued or when the Business has plateaued, which is commonly done for value stocks. In which case Buybacks becomes the best way to return value to share holders by purchasing under valued shares of themselves, trading their excess capital to reduce the supply of company shares that also improves dividend yield given its paid out to fewer outstanding shares.
It's the optimal way to return value to share holders when your share price is undervalued and you have excess capital. If the company ever needs to raise funds for a strategic M&A investment in the future they're always able to resell their shares again.
Some companies are content with maintaining a healthy business and not go after growth at all costs, which is a totally fine operating strategy.
If the company does not share its profits in any way with the shareholders, then I agree that it's not different from crypto. The thing is that usually there's an expectation that you will start paying out to your shareholders eventually. There are also companies that already pay out dividends - you can always invest only in those to dodge the "greater fool" problem, at least partially.
Re:Crypto is an unproductive bubble
by CountSessine on Friday March 18, 2022 @10:18PM
(#30730287)
You're giving the earnings back to investors because you don't have anything to invest them in yourself. Just like you're supposed to.
It's just that you're just doing it through a buyback rather than a dividend because dividends in the US are taxed like plain-old income and buybacks turn into capital gains and are taxed less.
Re:Crypto is an unproductive bubble
by AprilArcus on Friday March 18, 2022 @09:51PM
(#30730110)
So you're opposed to dividends as well?