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> In both cases the original owners are buying their own assets No. In a share buyback, the company is buying assets from other people. In wash trading, the cu
by function_seven 3y ago
> In both cases the original owners are buying their own assets
No. In a share buyback, the company is buying assets from other people. In wash trading, the current owner is “selling” the assets to themselves. (Or they’re working with someone else to do a loop)
And the retirement of these assets is different than the plan to sell them to another buyer.
- nico 3y agoIt’s called buyback because the companies are buying back their own stock It’s akin to the loop you describe, they sell the stock to someone else, then they buy it back I’m aware the timing, the disclosures, the regulations, etc are different The mechanism is still the same, they buy their own thing to make the price go up
- function_seven 3y agoThe timing changes everything. In a wash sale I immediately churn the asset with successively higher “selling” prices. In a buyback, the sale was many years ago, to someone else in the market. That’s makes all the difference. Just like if I buy a share of AAPL in 2007, sell it in 2011, buy another one in 2015, and sell that one in 2023. I did absolutely no wash trading. I just entered and exited a position a couple of times. Buy backs are a one-way event. They’re not a loop for the purposes of artificially increasing market cap. If the company decides to offer new shares for sale in five years, that doesn’t mean some sort of loop is formed. That’s a separate event. Wash trading aims to increase (apparent) market cap by creating trades through insincere activities.