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No science, no startups: The innovation engine we're switching off

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Re: No science, no startups: The innovation engine we're switching off

#241

Post by overrun11 »

triceratops wrote: post #188
overrun11 wrote: post #153

Earlier quoted context omitted.

This is just nonsense. Anyone can sell the stock if they wish, there is no privilege for the high-net worth. Additionally, shareholders benefit from reduced share count because it increases their claim on future profits thereby increasing compounding.

You're mixing up points 2 and 3. Anyone can sell, but buybacks benefit mostly sellers. Borrowing against stock is mostly something for HNW people. > shareeholders benefit from reduced share count because it increases their claim on future profits So...dividends? Or when they eventually sell? What if I never want to sell?

Buybacks are still better if you want to hold forever and don't care about share price. With a dividend distribution you must pay taxes and reinvest the diminished proceeds. You end up with a smaller share of the company than in the buyback scenario. Example:

A: Hold $10 of stock. Buyback of 1$ per share. You're left with $10 of stock. B: Hold $10 of stock. Dividend of 1$ per share. You're left with 9$ of stock and $1 cash - taxes payed. Once reinvested you have $9 + (1 * tax rate) in stock.

You're making two mistakes: One is thinking that dividends are magic money that do not cause share prices to fall in exact accordance with the distribution and the other is that buybacks lift the share price somehow (they do not, see Modigliani-Miller).

Re: No science, no startups: The innovation engine we're switching off

#242

Post by rapatel0 »

ilamont wrote: post #115

Universities spend ~$109 billion a year on research. ~$60 billion of that $109 billion comes from the National Institutes for Health (NIH) for biomedical research, National Science Foundation (NSF) for basic science, Department of War (DoW), Department of Energy (DOE), for energy/physics/nuclear, DARPA, NASA. Let's talk about the other $49B. I read or heard someplace that at many universities tuition paid by students…

> I read or heard someplace that at many universities tuition paid by students in the social sciences is effectively subsidizing the STEM fields

I'm very skeptical of this claim.

In fact up until a recent funding method change from the Trump Administration, most grant money was subject to "overhead"--a nebulous nonsensical accounting trick that allowed the university administration to get upwards of 60% of the dollars that are earmarked for grants. If you invent something, the school will take 70% of the revenue from the innovation. Much like VC, some big wins can power the school for years.

Actually, most highly productive research universities use the research as a prestige magnet and marketing tool to help grow endowments and keep up in the US News college rankings.

I would be great if the funding weren't so opaque. We may be able to find accounting info for the public univeristies. I would bet money that, Liberal arts tuition likely goes into administration, endowments, and campus improvements for student life (better food in the dining halls...)

Re: No science, no startups: The innovation engine we're switching off

#243

Post by echelon »

thunderfork wrote: post #165
echelon wrote: post #154

Earlier quoted context omitted.

This. Cut spending on admin staff and facilities. Schools do not need amenities to attract students. They need lower tuition. You could teach students out of a tent and do away with all the flashy health spas and do a better job at the core mission of empowering students. No new buildings, no land acquisitions, no taking over facilities from the state for millions of dollars. University leadership does not need to ma…

I don't see how "uncap admissions" and "don't take on any new infrastructure" are compatible.

Lecture halls sit empty while universities build amenities to make college seem like a staycation.

If a university truly needs more classrooms, so be it, but much of the spending is going to perks like gyms, saunas, and sports facilities.

Re: No science, no startups: The innovation engine we're switching off

#244

Post by echelon »

treis wrote: post #186
echelon wrote: post #131

Earlier quoted context omitted.

> I read or heard someplace that at many universities tuition paid by students in the social sciences is effectively subsidizing the STEM fields Diploma mill universities in my state are consolidating the smaller STEM universities and trade schools to build football and sports programs, gyms, and "lifestyle" amenities. This university in particular [1] mints basket weaving degrees and has used consolidation to build…

This is absurd. These universities aren't diploma mills. They're solid institutions in the "directional state U" tier.

You clearly aren't familiar. These "universities" are a step above DeVry. They might be worse in that they cost an arm and a leg to attend.

I used to tutor CS students at several different universities during my first two years at college. I would bet my arm that none of the ones I taught from KSU wound up with a career in software.

The student perspective at these schools is that they're there for the credential, not for the learning. Even at the risk of false negatives, I would actively filter out resumes listing schools like these. I would much sooner interview a non-degree holder.

Re: No science, no startups: The innovation engine we're switching off

#245

Post by overrun11 »

nyeah wrote: post #202
triceratops wrote: post #193

Earlier quoted context omitted.

> It seems like your assumption is that a stock buyback is a short term gain. My argument is a stock buyback isn't a gain for a long-term, buy-and-hold investor. Unless a) they sell some of the stock or b) it pays dividends they don't see the benefit of a higher stock price or reduced share count. Qualified dividends and long term capital gains are taxed at the same rate. So anyone who says "buybacks are more tax-adv…

I think I'm mostly agreeing. Anyway here's my story. Buybacks can be good or bad for shareholders, depending on the buyback price. Example. I take $1000 and securitize it as 1000 shares. The company sells the shares for $1 each. This is a no-fee closed fund, whatever. I'm the "CEO". I personally buy 1 share. Anyway, one day the stock trades at $0.90 and the company buys back 500 shares at that price. (How $0.90? Mayb…

Buybacks in theory do not cause share price to rise like your example though. Investors already price in that cash will be either reinvested at a high rate or returned to shareholders. You are reducing share count of a company that now has less cash which nets out in share price.

Re: No science, no startups: The innovation engine we're switching off

#246

Post by terminalshort »

nyeah wrote: post #235
terminalshort wrote: post #234

Earlier quoted context omitted.

This is a nonsensical example because companies aren't just barrels of cash, stock buybacks do not occur above market price, and companies never spend themselves broke to buyback shares because that would be retarded. You might try learning how corporate finance actually works before posting like you are an expert on it.

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Re: No science, no startups: The innovation engine we're switching off

#247

Post by terminalshort »

nyeah wrote: post #124
terminalshort wrote: post #113

Earlier quoted context omitted.

[flagged]

Hard to say for sure. I don't know either of them. But I'm not casting aspersions on the commenter. I'm responding directly to his implication that if he doesn't understand X then X is false. That's not a thing.

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Re: No science, no startups: The innovation engine we're switching off

#249

Post by terminalshort »

triceratops wrote: post #194
terminalshort wrote: post #119

Earlier quoted context omitted.

Yes. This is correct. Share buybacks are financially equivalent to a dividend from the company's perspective, and slightly better from the shareholder's perspective because they can choose when to take the dividend and pay capital gains tax instead of income tax on it.

Qualified dividends (stock held more than 60 days) and long term capital gains are taxed at the same rate.

Good point, but that only applies to individual, not corporate shareholders.

Re: No science, no startups: The innovation engine we're switching off

#250

Post by nyeah »

overrun11 wrote: post #245
nyeah wrote: post #202

Earlier quoted context omitted.

I think I'm mostly agreeing. Anyway here's my story. Buybacks can be good or bad for shareholders, depending on the buyback price. Example. I take $1000 and securitize it as 1000 shares. The company sells the shares for $1 each. This is a no-fee closed fund, whatever. I'm the "CEO". I personally buy 1 share. Anyway, one day the stock trades at $0.90 and the company buys back 500 shares at that price. (How $0.90? Mayb…

Buybacks in theory do not cause share price to rise like your example though. Investors already price in that cash will be either reinvested at a high rate or returned to shareholders. You are reducing share count of a company that now has less cash which nets out in share price.

Demand tends to push price up. Investors don't really know who's buying until later.

But yes, of course it's a toy example. I should probably have made the buybacks drive the price from $1.10 to $1.20 or something, with a much smaller reward for the founder & CEO. I got bored and kept it simple. (Or I got greedy for that $1 profit, maybe.)

All the working parts of the example are on display. You can make other examples that seem better to you.

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