Stock Buybacks?  Opinions?

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  #51  
Old 12-27-2018, 01:38 PM
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I started this thread in August. Just now, I read back through it. Then I went to Google where I found lots of current news on the subject with comments by those who, unlike me, are actually qualified.

I just read that 2018 has seen a trillion dollars in corporate buybacks, so far. Those buybacks are investments in the stockholder instead of investments in research, innovation, employees, building new US facilities -- things that would actually contribute to improving the overall economy.

I realize some of you do not agree with me. But I remain of the opinion that 2018 has been a smoke and mirrors market.

But, also, I bet that there are dividend investors who have not bought anything new this year, but are now making a list, checking it twice, going to find out what has been naughty or nice -- over the past decade, at least, not just during this freak show of a market.

Disclaimer by Boomer: My qualifications for market commentary? I got nuthin'.
But how does that compare to prior years? And if it has increased (which I'm sure it did) did R & D and employee spending increase also? Or did all of the tax break money go into buybacks?
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  #52  
Old 12-27-2018, 02:01 PM
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Santa Claus rally - Wikipedia

A Santa Claus rally is a rise in stock prices in the month of December, generally seen over the final week of trading prior to the new year.[1][2] It is a type of calendar effect.[citation needed]
There is no generally accepted explanation for the phenomenon.[1] The rally is sometimes attributed to increased investor purchases in anticipation of the January effect,[1] an injection of additional funds into the market, and to additional trades which must, for accounting and tax reasons, be completed by the end of the year.[1][2] Other reasons for the rally may be fund managers "window dressing" their holdings with stocks that have performed well,[citation needed] and the domination of the market by less prudent retail traders as bigger institutional investors leave for December vacations.[1]



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  #53  
Old 12-27-2018, 02:22 PM
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But how does that compare to prior years? And if it has increased (which I'm sure it did) did R & D and employee spending increase also? Or did all of the tax break money go into buybacks?
Actually, Ken, I cannot resist a good question so I went on a quick hunt to try to answer yours. I was looking for definitive comparisons.

You are right with your "which I'm sure it did" comment. But I wanted to find percentages. I found articles from earlier in the year which said buybacks were outpacing capex but capex was happening, just not as much going into it. 2018 buybacks were way ahead of 2017, according to one article.

I guess we will see more articles and opinions early in 2019 or when all the numbers are in.
  #54  
Old 12-27-2018, 02:27 PM
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Snip...>

I just read that 2018 has seen a trillion dollars in corporate buybacks, so far. Those buybacks are investments in the stockholder instead of investments in research, innovation, employees, building new us facilities -- things that would actually contribute to improving the overall economy.

I realize some of you do not agree with me. But I remain of the opinion that 2018 has been a smoke and mirrors market.
<...Snip

Yep.
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  #55  
Old 12-27-2018, 02:52 PM
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Actually, Ken, I cannot resist a good question so I went on a quick hunt to try to answer yours. I was looking for definitive comparisons.

You are right with your "which I'm sure it did" comment. But I wanted to find percentages. I found articles from earlier in the year which said buybacks were outpacing capex but capex was happening, just not as much going into it. 2018 buybacks were way ahead of 2017, according to one article.

I guess we will see more articles and opinions early in 2019 or when all the numbers are in.
Unfortunately I think we know how the numbers will shake out.. At least for the Fortune 500. Hopefully some of the smaller and younger companies are (re)investing in their futures
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  #56  
Old 12-29-2018, 09:33 AM
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Unfortunately I think we know how the numbers will shake out.. At least for the Fortune 500. Hopefully some of the smaller and younger companies are (re)investing in their futures
(sigh) I know what you mean.

And how long will these buybacks continue.

Over a trillion corporate dollars was spent on buybacks in 2018, not only inflating the price per share, but skewing the EPS. Buybacks can make bonus-grabbing CEOs look better than they actually are.

Time will tell, probably sooner rather than later. Meanwhile, I will try not to be an instant gratification seeking amnesiac, looking only at share price. (Never have been — well, actually, not since dancing with that big bubble in the 90s.)
  #57  
Old 12-29-2018, 10:24 AM
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Apple is sitting on $250 billion in cash. And how many of their products are made here? Just some food for thought.

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  #58  
Old 12-29-2018, 10:54 AM
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Apple is sitting on $250 billion in cash. And how many of their products are made here? Just some food for thought.

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"...tax cuts, which slashed the corporate tax rate from 35% to 21%, boosted corporate profits overnight for many big firms. Combined with the new provision that caused U.S. companies to repatriate billions in overseas earnings, many companies are awash in cash.

But, says Michael Patcher, an analyst at Wedbush Securities, “The tax law didn’t do anything to provide an incentive to employers to create jobs. There’s nothing in there that would suggest that employers have a particular incentive to hire more people or pay the ones that they have more money.”


How Companies Are Spending the Trump Tax Cuts | Money

"Apple, as usual, is leading the pack with a record-breaking $100 billion stock buyback. "


All of this makes the stocks more valuable and benefits anyone who has a large stake in the company....ie, the executives.

I am out of my element with this, but my concern, and if I should not be concerned please correct me.

The buybacks were predicted immediately on the new tax bill, but the dramatic increase it caused in our deficit is still growing and it was supposed to come down.

That deficit worries me more than anything......it is something we pass on to our children and grandchildren and I recall all the worrying when it was so much lower
  #59  
Old 01-19-2019, 08:27 AM
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This market is multi-faceted. I guess markets always are, but this one feels more so. I have been aware for decades and I cannot remember ever feeling like the picture was so big, with so many moving parts.

Please notice that I said "feels" because I am not an analyst.
Along those lines, and in contradiction to my overall philosophy of 'buy and hold,' Friday's little rally has convinced me that it's now time...to become more conservative in my funds.

And while in 6 months, if this already record bull run continues and I may have left money on the table, I am more than satisfied with my annual returns over the last 10 years...and will have no regrets.

There are just too many "big, with so many moving parts...," (of which are too political to go into detail here)...that makes me think it's time to sit on the sidelines for a while.

Since it will be my children who will be the beneficiaries of my financial decisions, I think they will understand my philosophy that...'pigs get fat, hogs get slaughtered.'

I also believe that the markets will also get back to a position where it makes sense to be more aggressive, it's just my (non-professional financial opinion)...now is not that time.
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  #60  
Old 01-19-2019, 10:04 AM
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Along those lines, and in contradiction to my overall philosophy of 'buy and hold,' Friday's little rally has convinced me that it's now time...to become more conservative in my funds.

And while in 6 months, if this already record bull run continues and I may have left money on the table, I am more than satisfied with my annual returns over the last 10 years...and will have no regrets.

There are just too many "big, with so many moving parts...," (of which are too political to go into detail here)...that makes me think it's time to sit on the sidelines for a while.

Since it will be my children who will be the beneficiaries of my financial decisions, I think they will understand my philosophy that...'pigs get fat, hogs get slaughtered.'

I also believe that the markets will also get back to a position where it makes sense to be more aggressive, it's just my (non-professional financial opinion)...now is not that time.
It is not easy to make market comments in posts on TOTV while pretending not to see the big elephant in the room but I will try.

I still do not like how I “feel” about where things could be headed.

Sometimes there can be a comfort zone built in to good solid dividend-paying stocks, paying their investors to wait through ups and downs. This is where the “buy and hold” philosophy sometimes can work out particularly well. With the right choices the dividends keep on, even if the stock price chart looks like a rollercoaster.

I think 2019 could bring some buying opportunities.

The Investment Education Club in TV now has a “Dividend Discussion Group” that is separate from their usual meetings — which have all different kinds of topics. My email said this year the dividend discussions will be at Colony each month, second Wednesday, 11:00. (I think I am remembering the email right, but anybody interested should verify.)

I am no expert nor do I claim to be. But I think investors need to be paying especially close attention to all the moving parts that underpin the market. Consumer confidence? Healthcare costs? Housing? CD rates? etc.?

Last edited by Boomer; 01-19-2019 at 10:40 AM.
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