Stk Buy Back
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Started by wglassfo - Sept. 26, 2019, 2:58 p.m.

I keep posting about stk buy back, and nobody seems to see the danger or benefit if any

Yes buy back increases your paper wealth if you own the stk, but do you cash in your earnings. If so then good for you

But CEO benifit much more than most stk share holders and these CEO cash in their stk options/shares as part of their pay pkg. for immeditae cash plus salary. Low int rates encourage using cash to buy back stks to increase stk values and many Co. either use cash, borrow at low int rates, and/or use bonds or loans to finance stk buy back

Now most think we might have a recession by 2020. If not then party on with paper wealth. But at some time the party ends. Even if the Fed injects massive liquidity, the party has to end some time. Some people have a hard time remembering the last time the market crashed. Miami is in a real estate recession with condo values going down and some with below initial value and no bids. Although new construction continues the cost of carry is going to cause massive pain to many

CO with bonds or loans coming due may not be able to re-fi given the economic out look. Miami may or may not be a signal to the rest of the country that some continue the party while all around there are no bids. A no bid market is the worst, that could happen.

Who suffers if stk go down hill. If you think stk will never go down hill then party on. If you think stk will follow a cycle of up and down then watch stk go down quickly as co. find re-fi impossible and liquidate assets to pay loans or/and bonds

Mean while the CEO has a pocket full of cash and no obligation as to future Corp finance, short of losing a job. But with a pocket full of cash does that hurt so bad. ??Especialy with a golden parachute if the CEO lost his job, which may or may not pay so much "for cause" of losing a job

I read of many who are holding cash which could be part of the problem with repo which I know zip

Perhaps cash is better than negative int while folks wait for the stk market to crash. What else might pay a dividend?? if the market crashes and then "buy low" but as always what is the low??? Cash will likely sit for some time if the decision has been made to accumulate cash

Some think the Fed may try to keep the stk market on a level plane at worst. But the money to do that would be so massive, inflation would be the likely senerio, so maybe scratch that idea.

Does anybody think stks are a good investment at current values??? and why???

I don't and this is why

I think the days of buying the dips are slowly coming to an end and then we go down hill quickly, as the party comes to an end.

Even zero int which Trump wants may not save the stk market if stks start to go down and then the market piles on the short side. There is a lot of cash waiting for blood in the street and these folks won't be shy about waiting or taking the short end.

The USA is the only country I  know that has some kind of an economy that is workig although china thinks 6% GDP growth is a disaster. Some day if the trade wars continue, the economy will suffer the consequences, same as the rest of the world. Protectionism is not the answer as the USA economy is 70% service, which leaves 30% in a bind, at the mercy or world markets and tariffs. Just look at Ag if you need a reminder.

It's almost like the corn in Illinois. Many thought they had a good crop although maybe not their best, only to see some fields destroyed by sprouts and or mold in the ear, destroying as much as 25% of expected yield. That close to harvest and then a black swan, from too much rain and above temps

Stk markets, any thing, in any market can happen when you least expect it. When red flags are waving then look out. The red flag may mean some thing.

Comments
By metmike - Sept. 26, 2019, 3:37 p.m.
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Thanks Wayne!

By wglassfo - Sept. 26, 2019, 5:35 p.m.
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I find this hard to believe but I read that stk buy back and Fed asset purchases is the majority of stk purchases. Does a person believe everything they read???

I didn't even know the fed was expanding their asset sheet Stk buy back yes. Fed buying???, could have fooled me

That tells everybody how much I know

By pj - Sept. 26, 2019, 6:49 p.m.
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"I find this hard to believe but I read that stk buy back and Fed asset purchases is the majority of stk purchases."

I find it impossible to believe. As far as I know, the Fed has never directly bought any stocks at all.