Quote:
Originally Posted by blueash
Southwest per the CNN link above is still using technology for its phones, IT etc that are well out of date and has caused issues in the past. A few years ago there was a large tax cut for corporations so they could invest in new products and modernization. What did they do with this windfall? Many US corporations chose to use this new money to buy back their own stock which pushes the stock price up and rewards investors only, no benefit to consumers.
Quick now, who made this highly critical comment about airlines using tax cuts to push up their stock price instead of investing in workers and infrastructure:
“When we did a big tax cut, and when they took the money and did buybacks, that’s not building a hangar, that’s not buying aircraft, that’s not doing the kind of things that I want them to do. We didn’t think we would have had to restrict it because we thought they would have known better. But they didn’t know better, in some cases.”
Many had in fact predicted that the huge tax cuts would go right into the pockets of corporations and stay there rather than be used to benefit the non-stockholders. Surprising fact:
The huge 'blackout' that may be deepening market turbulence | CNN Business
The biggest buyer of stocks between 2009 and 2018 was not individual investors, was not institutional investors... it was corporations buying their own stocks, 4.3 TRILLION dollars in buybacks. |
"The biggest buyer of stocks between 2009 and 2018 was not individual investors, was not institutional investors... it was corporations buying their own stocks, 4.3 TRILLION dollars in buybacks."
You are absolutely correct.
I believe that as long as executive compensation is tied to a single years stock price, this practice will not end. I have always thought that, at a minimum, their yearly bonuses should be based on a 2-3 year rolling average of their stock price. This way, the long term viability of the company/corporation will be given more thought and attention for the average long-term investor, rather than how the stock performed in just one year.