8 ms·

I don't get people's aversion to stock buybacks. If a company has money it cannot productively spend, it should return that money to shareholders. Stock buybac

I don't get people's aversion to stock buybacks. If a company has money it cannot productively spend, it should return that money to shareholders. Stock buybacks are a tax efficient way to do that. The company believes the asset wasn't very profitable for them to own, so they sold it and gave the shareholders the money back.

dpcx 6y ago
Could it not spend some portion of that money on research and development? I feel that literally any industry could find improvements.
- wsetchell 6y ago
  To justify spending that money, they'd have to think they'd get better returns on their R&D than shareholders could get elsewhere (e.g. by just buying the S&P 500). It is quite difficult to beat the S&P 500, and they're saying they don't have any ideas which can.
  - francescopnpn 6y ago
    true and sad-reflective of the world's state (last 50y)
  - jandrese 6y ago
    If the shareholders don't think the R&D is going to be profitable then they can sell their own shares. It doesn't seem like the company should be making that decision for them. More to the point, if the company is seeing such great profits then their competitors should be undercutting them. If they don't have competitors then maybe they should be regulated more like a utility and give that money back to the customers. Stock buybacks usually end up being just a handout to the rich, which they don't need.
    - tinalumfoil 6y ago
      > If the shareholders don't think the R&D is going to be profitable then they can sell their own shares It's not that the companies aren't profitable, it's that past a certain point their money is more valuable as cash to their shareholders than anything the company could use it for.
    - beervirus 6y ago
      But the company management is in a better position than the shareholders to know whether the company can engage in profitable R&D.
- imtringued 6y ago
  Investors can decide to spend the returned money on a more innovative business.
stainforth 6y ago
Some of the money should go to the workers
- beervirus 6y ago
  It does, in salaries.

dpcx 6y ago

Could it not spend some portion of that money on research and development? I feel that literally any industry could find improvements.

wsetchell 6y ago
To justify spending that money, they'd have to think they'd get better returns on their R&D than shareholders could get elsewhere (e.g. by just buying the S&P 500). It is quite difficult to beat the S&P 500, and they're saying they don't have any ideas which can.
- francescopnpn 6y ago
  true and sad-reflective of the world's state (last 50y)
- jandrese 6y ago
  If the shareholders don't think the R&D is going to be profitable then they can sell their own shares. It doesn't seem like the company should be making that decision for them. More to the point, if the company is seeing such great profits then their competitors should be undercutting them. If they don't have competitors then maybe they should be regulated more like a utility and give that money back to the customers. Stock buybacks usually end up being just a handout to the rich, which they don't need.
  - tinalumfoil 6y ago
    > If the shareholders don't think the R&D is going to be profitable then they can sell their own shares It's not that the companies aren't profitable, it's that past a certain point their money is more valuable as cash to their shareholders than anything the company could use it for.
  - beervirus 6y ago
    But the company management is in a better position than the shareholders to know whether the company can engage in profitable R&D.
imtringued 6y ago
Investors can decide to spend the returned money on a more innovative business.

stainforth 6y ago

Some of the money should go to the workers

beervirus 6y ago
It does, in salaries.