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Dividends and Buybacks Now Larger Than Total Reported Earnings for Entire S&P500

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Re: Dividends and Buybacks Now Larger Than Total Reported Earnings for Entire S&P500

#111

Post by dorchadas »

EliRivers wrote: post #87
dorchadas wrote: post #65

Earlier quoted context omitted.

Wasn't there that Michigan Supreme Court decision that states that was precisely the purpose of a company -- to maximize shareholder value?

You're thinking of https://en.wikipedia.org/wiki/Dodge_v._Ford_Motor_Co . , which was literally a century ago. If you scroll down to "Significance", you can read for yourself that it's by no means universally accepted ("that this interpretation has not represented the law in most states for some time"). Let's come forwards a little; as the U.S. Supreme Court recently stated, "modern corporate law does not require for…

Thank you! I just remember reading about it before, but didn't know much more. Thanks for the info, and definitely glad that's changed!

Re: Dividends and Buybacks Now Larger Than Total Reported Earnings for Entire S&P500

#112

Post by __blockcipher__ »

lovich wrote: post #12
__blockcipher__ wrote: post #9

Earlier quoted context omitted.

Once a company has no need for more cash, there is no point to sell shares. The whole point of a IPO is to fund growth / give founders and early employees a payout. Share buybacks aren’t about propping up the price (when done correctly). They’re about tax efficiently increasing your ownership share. Or you can think of it as paying money now to reduce the amount you need to pay in dividends, all else equal. Share rep…

Because it's difficult to distinguish between executive leadership trying to efficiently return money to shareholders vs propping up the share price so that they see a personal benefit via their own shares increasing or via contractual bonuses. Given that there's an incentive to spend other peoples money(shareholders who bought shares) to increase their own(via bonuses, salary, or granted shares) it's fairly safe to…

Doesn’t apply if the incentives are structured based on market cap, not per-share price.

Re: Dividends and Buybacks Now Larger Than Total Reported Earnings for Entire S&P500

#113

Post by dwaltrip »

nostrademons wrote: post #110
dwaltrip wrote: post #109

Earlier quoted context omitted.

To determine "who is doing buybacks", don't we need to normalize by market cap, annual revenue or profit, or some similar metric? Apple having the largest buyback amount doesn't seem to tell us a ton by itself, given that they are among the top few most valuable companies in the world.

Depends on the conclusion you're trying to draw from the data. The headline is "Dividends and buybacks now larger than the total reported earnings of the S&P 500." For that conclusion, it's absolutely relevant that Apple et al are doing the buybacks and that their market cap dwarfs many of the companies on the S&P 500 (which has a threshold of $6B to enter, vs. close to $1T for Apple). Apple deciding that they're goi…

Ah ok, I see what you mean. Thanks.

Re: Dividends and Buybacks Now Larger Than Total Reported Earnings for Entire S&P500

#114

Post by mathattack »

lrem wrote: post #96
mathattack wrote: post #77

Earlier quoted context omitted.

Good point. And this is why value stocks (that return money to shareholders) outperform growth stocks over time.

Naive question: istn't the idea of "growth stocks" to become value stocks at some point?

Yes - stocks don’t stay in their category forever. Most start needing capital, and then eventually return in.

Re: Dividends and Buybacks Now Larger Than Total Reported Earnings for Entire S&P500

#115

Post by ohiovr »

1. Companies are borrowing money and going into debt to buy their own stocks. 2. Some stock holders and insiders have huge holdings, a perfect supplier for the stocks to buy. 3. Stock volume exploded soon after trump was elected in the s&p 500 and the Dow. But a comparable surge in volume in the Russel 2000 and NASDAQ is not there. 4. As a result of the buying pressure, stocks rise, the market looks to rise in value. 5. Eventually money is not cheap to borrow any more. 6. More than 50% of the buying power suddenly stops.

Re: Dividends and Buybacks Now Larger Than Total Reported Earnings for Entire S&P500

#116

Post by JohnJamesRambo »

MrRadar wrote: post #94
JohnJamesRambo wrote: post #29

Earlier quoted context omitted.

The unceasing robot dog terminator hunts you down, pins you, and shows you ads on its visor/eyes.

This comment reminds me of one of my favorite pieces of Internet fiction titled Attention Deficit Disorder[1]. The original context was a thread where the OP was arguing for a literal "attention economy" and the story is meant to extrapolate their arguments into absurdity. [1]: https://pastebin.com/KCbP6rbr

Lol this is terrifying.
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