Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

S&P 500 Buybacks Now Outpace All R&D Spending in the US

thesoundingline.com

Post reply on HN
Print view View original

321–330 of 402 posts

Re: S&P 500 Buybacks Now Outpace All R&D Spending in the US

#321

Post by jonathankoren »

aguyfromnb wrote: post #248
jonathankoren wrote: post #103

Earlier quoted context omitted.

> Companies are giving their cash back to shareholders because each individual company thinks their shareholders can better allocate the cash, rather than the companies themselves. This is very strange explaination. As stated it sounds like stock buybacks are some sort of altruistic endeavor resulting from some kind of collective shrug. This couldn’t be further from truth. Buybacks are the result of executive incenti…

> This couldn’t be further from truth. Buybacks are the result of executive incentives to hit a certain stock valuation. Why do you ignore the people who choose to sell their shares to the company? Stock buybacks move cash from the company's coffers into the hands of selling shareholders, period. Whether it's good or bad to do so at any specific time is certainly debatable, but the idea that it "manipulates" the shar…

Tell me how a stock buyback (ie a reduction in supply under constant demand) results in a falling share price.

It’s a common very common way to juice the numbers.

As for those that choose to sell, its obviously. It’s free money.

Re: S&P 500 Buybacks Now Outpace All R&D Spending in the US

#322

Post by boomboomsubban »

crazygringo wrote: post #156
boomboomsubban wrote: post #138

Earlier quoted context omitted.

Why would a retirement fund want a buyback? They would prefer a healthier company in ten years rather than a lump sum they need to pay someone to reinvest.

1) Because buybacks and dividends are what produce the entire value of stock at the end of the day. 2) Buybacks don't need to be reinvested, they already are by definition. 3) Rebalancing your portfolio due to buybacks is done automatically by your fund that you already pay a small maintenance fee for. There's nothing unhealthy about buybacks, that's a total misconception that needs to die. They're just treated diffe…

1)The value of the stock is based on the value of the company, a better performing company produces more value than a buyback. 2) I'll admit I'm not too knowledgeable about every kind of buyback, but surely some involve buying back stocks. For some kinds, you're probably right. 3) I would be surprised if many funds existed where there weren't transaction fees or a percentage based fee, giving them reasons to prefer buybacks even if it doesn't help the actual owner.

>They're just treated differently from unqualified dividends for tax purposes

Tax loopholes are unhealthy in my book.

Re: S&P 500 Buybacks Now Outpace All R&D Spending in the US

#324

Post by boomboomsubban »

JackFr wrote: post #177
boomboomsubban wrote: post #138

Earlier quoted context omitted.

Why would a retirement fund want a buyback? They would prefer a healthier company in ten years rather than a lump sum they need to pay someone to reinvest.

> they need to pay someone to reinvest. What exactly do you think a retirement fund is, if not someone who get paid to reinvest?

You already paid someone to invest the money, why should a company doing well cause you to pay to reinvest?

Re: S&P 500 Buybacks Now Outpace All R&D Spending in the US

#326

Post by ahakki »

triceratops wrote: post #216
hippich wrote: post #163

Earlier quoted context omitted.

Retirement accounts are limited by the amount one might deposit annually. The most perhaps one can make is 19k in 401k and perhaps somehow max out SEP IRA - $56k (which I find quite tough to max out). Regular IRAs are out of questions, since at the income level dealing with 401k and SEP IRA, one does not get any benefits of funding regular IRA afaik. So... The best-case scenario is $75k per year someone might be able…

Err...$75k/year over 50 years with 4% real rate of return (pretty modest) gives me over $11m.[1] 1. https://www.buyupside.com/calculators/recurringinvestmentcal...

> 4% real rate of return (pretty modest)

Citation needed. My savings account has been paying 0.1% for about a decade now. They just introduced a new 0.0% rate on deposits over CHF 250'000 :)

Re: S&P 500 Buybacks Now Outpace All R&D Spending in the US

#327

Post by metalgearsolid »

SlowRobotAhead wrote: post #318
metalgearsolid wrote: post #211

Earlier quoted context omitted.

Strongly agree. Elon Musks' $40k USD Cybertruck reveal was one of the first times in years it felt like our present was making some kind of headway into the future, but while also being accessible to common people ($40k truck is still a huge luxury don't get me wrong).

> 40k truck is still a huge luxury don't get me wrong) I don’t think you have priced trucks in awhile. You can buy a 60k Jeep truck, an 85k RAM 2500, a 95k GMC Sierra ATR4 (or whatever), a 65k Bison Colorado, etc etc. Trucks got expensive. I think you price new 40k trucks you’re going to be looking at Tacomas. 40k for a specialty electric truck is absolutely too good to be true, and I promise you it won’t happen like…

You're not wrong, but I'm considering it a luxury outside the real of automotive. I've been working full time as software developer for 3 years and I cannot afford a Cybertruck. Not even close lol.

Re: S&P 500 Buybacks Now Outpace All R&D Spending in the US

#328

Post by ethbro »

rumanator wrote: post #270
voxic11 wrote: post #132

Earlier quoted context omitted.

Don't stock buybacks basically transfer wealth from the company to the shareholders? The major advantage this has over other means of transferring wealth is that shareholders get to realize their gains with only capital gains tax applied, rather then the much higher dividend tax rate.

> Don't stock buybacks basically transfer wealth from the company to the shareholders? There's some confusion in your comment. The company is already property of the shareholder. The shareholder holds shares of the company. Thus, the assertion that stock buybacks transfer wealth from the company to the shareholder is a tautology because the wealth from the company is already the wealth of the shareholder.

In the individual case, some number of shares in the company is property of the shareholder.

Perhaps more accurate would be to say they liquidate part of a company's wealth (the broader value of all assets owned by the company) into stock price (the value at which a share can be sold on the open market).

From this perspective it seems fair to say that they transfer wealth from company control to shareholder control.

Re: S&P 500 Buybacks Now Outpace All R&D Spending in the US

#329

Post by duelingjello »

thehappypm wrote: post #143
duelingjello wrote: post #85

Earlier quoted context omitted.

$1T would be enough seed money to get an international effort moving to solve climate change using emissions targets, ferrous phytoplankton seeding like IRONEX I and/or kelp blooming/capture/sequestration. Much cheaper than the inflated numbers thrown around as arguments for doing nothing / delaying longer that ignore the $200+ trillion destroyed by doing nothing. Deny -> extinction Complain about costs -> extinction…

I have never heard of extinction as a possible consequence of climate change. Care to elaborate how that might be possible? Even if society crumbles due to unrest, the Earth will be inhabitable in at least some areas. It's hard to imagine that every single human being on Earth will die.

Maybe my wording conflates unintentionally meaning "extinction of humans" with "extinctions of many species." Extinction of many species is happening at several orders-of-magnitude of background, historical trends. Homo sapiens sapiens extinction outright is unlikely unless we double-down on emissions.

Let's call climate change a "Dial-a-yield" planetary nuke that will extinct many species and most likely reduce our numbers anywhere from 1-50 million if nothing is done, e.g., pre-historic levels. We have to make drastic changes now to dial back the "yield." How bad climate change has to be is ultimately up to all people across the world, here and now.

Re: S&P 500 Buybacks Now Outpace All R&D Spending in the US

#330

Post by Consultant32452 »

georgeburdell wrote: post #244
try-perforate wrote: post #4

Read an idea in American Affairs in support of taxing buybacks. The logic goes that if all companies have a fiduciary duty to shareholders because the market is the most efficient capital allocator, AND all companies are giving their cash back to shareholders, THEN it must be true that the market can not figure out how to efficiently allocate this $1T of capital. Thus, the government should have “next dibs” for items…

When one has a hammer, everything seems a nail. Taxes are not money looking for something to spend it on. I could argue that corporate taxes are redundant because people ultimately run and benefit from corporations so tax them instead. In reality it doesn’t matter because the government needs $X to fund its obligations and will get it however it can

The federal government doesn't need to raise any taxes to pay bills, it can just create currency. Once you realize the primary purpose for taxes is social policy, it makes more sense.
Post reply on HN