Swill Bin favorite rich guy slams stock buyback critics

tGreenWay wrote:

Turtleneck wrote:

I think it has been decided for us even though our favorite rich guy is obviously Guest.

You sonuvabitch! I told you that in SECRET! Let’s fight!

Buffett may be correct about buybacks being good for shareholders, for the simple reason that each remaining outstanding share has more corporate profit behind it.

But the Oracle of Omaha is dead wrong about buybacks being good for the country. They merely enrich people who own shares of stock (the richest 10 percent of Americans own 92 percent of the stock market) rather than add to the productive capacity of America.

To take but one recent example: Last year, the Norfolk Southern Railway enjoyed record revenue and operating income — $3.2 billion in the fourth quarter alone, a remarkable 13 percent year-over-year increase.

How did the railroad accomplish this? By cutting nearly 10,000 jobs — reducing its workforce by a third while running fewer, longer trains. Some trains now stretch longer than 2 miles. It made these changes despite warnings that they worsened safety risks.

The corporation also refused to provide its remaining workers with sick leave. And it failed to invest in improved safety equipment. (As I noted last week, the railroad mounted a major lobbying blitz against stronger safety regulations.)

And what did Norfolk Southern do with all the money it saved from cutting its workforce, running longer trains, refusing sick leave, and scrimping on safety?

Over the past two decades, it has boosted shareholder payouts by 4,500 percent (along the way enriching Warren Buffett and other investors).

Specifically, it has spent billions on stock buybacks — hitting a record $4.7 billion in buybacks and dividends last year.

Trapper Gus wrote:https://robertreich.substack.com/p/warren-buffett-is-dead-wrong-about

Buffett may be correct about buybacks being good for shareholders, for the simple reason that each remaining outstanding share has more corporate profit behind it.

But the Oracle of Omaha is dead wrong about buybacks being good for the country. They merely enrich people who own shares of stock (the richest 10 percent of Americans own 92 percent of the stock market) rather than add to the productive capacity of America.

To take but one recent example: Last year, the Norfolk Southern Railway enjoyed record revenue and operating income — $3.2 billion in the fourth quarter alone, a remarkable 13 percent year-over-year increase.

How did the railroad accomplish this? By cutting nearly 10,000 jobs — reducing its workforce by a third while running fewer, longer trains. Some trains now stretch longer than 2 miles. It made these changes despite warnings that they worsened safety risks.

The corporation also refused to provide its remaining workers with sick leave. And it failed to invest in improved safety equipment. (As I noted last week, the railroad mounted a major lobbying blitz against stronger safety regulations.)

And what did Norfolk Southern do with all the money it saved from cutting its workforce, running longer trains, refusing sick leave, and scrimping on safety?

Over the past two decades, it has boosted shareholder payouts by 4,500 percent (along the way enriching Warren Buffett and other investors).

Specifically, it has spent billions on stock buybacks — hitting a record $4.7 billion in buybacks and dividends last year.

TravelinMan wrote:

Trapper Gus wrote:https://robertreich.substack.com/p/warren-buffett-is-dead-wrong-about

89% of households making $100K+ own stock, via some form of individual stocks they may own, or stocks included in a mutual fund or retirement savings account, like a 401(k) or IRA.  When people decry stock buybacks aren't good for the country, they forget that citizens ARE the country.  In a time when we lament that people aren't saving enough for retirement and that the American dream is dead, almost anything we can do to help people's net worth grow is, indeed, good for the country.

Median (50% of households) household income was $67,521 in 2020, a decrease of 2.9 percent from the 2019 median of $69,560 (Figure 1 and Table A-1).

Trapper Gus wrote:

TravelinMan wrote:

89% of households making $100K+ own stock, via some form of individual stocks they may own, or stocks included in a mutual fund or retirement savings account, like a 401(k) or IRA.  When people decry stock buybacks aren't good for the country, they forget that citizens ARE the country.  In a time when we lament that people aren't saving enough for retirement and that the American dream is dead, almost anything we can do to help people's net worth grow is, indeed, good for the country.

That is 33.6% of the households in the US, so the other 66.4% own 11% of the stock.  The second link provides some detail on what percentage of certain income groups own stock.  Using that source, it is shown that about 62% of households own any stocks, so about 28% of households with income under $100k own any stock.

The percentage of households which earn 100k plus can be seen via table A-2 in the link.

With some additional math between the numbers in Table A-2 and the second link I think we can determine how much of each income group owns stock, maybe I will do that later.

The bottom line is that a majority of the (false) value add from stock buybacks goes to a minority of the population.

Also from the link -

Median (50% of households) household income was $67,521 in 2020, a decrease of 2.9 percent from the 2019 median of $69,560 (Figure 1 and Table A-1).

 The decrease was surely due to covid.

https://www.census.gov/library/publications/2021/demo/p60-273.html

https://www.sec.gov/spotlight/fixed-income-advisory-committee/finra-investor-education-foundation-investor-households-fimsa-040918.pdf#:~:text=Data%20from%20the%202012%20National%20Financial%20Capability%20study,38%20percent%20do%20not%20own%20any%20investment%20accounts.2

TravelinMan wrote:

Trapper Gus wrote:

That is 33.6% of the households in the US, so the other 66.4% own 11% of the stock.  The second link provides some detail on what percentage of certain income groups own stock.  Using that source, it is shown that about 62% of households own any stocks, so about 28% of households with income under $100k own any stock.

The percentage of households which earn 100k plus can be seen via table A-2 in the link.

With some additional math between the numbers in Table A-2 and the second link I think we can determine how much of each income group owns stock, maybe I will do that later.

The bottom line is that a majority of the (false) value add from stock buybacks goes to a minority of the population.

Also from the link -

 The decrease was surely due to covid.

https://www.census.gov/library/publications/2021/demo/p60-273.html

https://www.sec.gov/spotlight/fixed-income-advisory-committee/finra-investor-education-foundation-investor-households-fimsa-040918.pdf#:~:text=Data%20from%20the%202012%20National%20Financial%20Capability%20study,38%20percent%20do%20not%20own%20any%20investment%20accounts.2

The people who don't own stock don't factor into this discussion. The guy panhandling on the exit ramp isn't going to benefit from anything other than a psych eval and a hot meal. Let those that are doing the right thing benefit and figure out other solutions for those that aren't.

Trapper Gus wrote:

TravelinMan wrote:

The people who don't own stock don't factor into this discussion. The guy panhandling on the exit ramp isn't going to benefit from anything other than a psych eval and a hot meal. Let those that are doing the right thing benefit and figure out other solutions for those that aren't.

And why not, pray tell are we ignoring the majority of the population which do not own enough stock to gain from stock buy backs in a thread about the value of stock buy backs to the entire population of the United States?

BTW - we haven't gotten into the fact that about 30% of US stocks are owned by people who are not citizens of the US.

TravelinMan wrote:

Trapper Gus wrote:

And why not, pray tell are we ignoring the majority of the population which do not own enough stock to gain from stock buy backs in a thread about the value of stock buy backs to the entire population of the United States?

BTW - we haven't gotten into the fact that about 30% of US stocks are owned by people who are not citizens of the US.

Because if you're too poor or too dumb to not own stocks, then this isn't about you.  You need other help.  This is like debating the effectiveness of bandaids and pointing to the guy who got his arm caught in a wood chipper as your evidence.

Because if you're too poor or too dumb to not own stocks, then this isn't about you. You need other help. This is like debating the effectiveness of bandaids and pointing to the guy who got his arm caught in a wood chipper as your evidence.

Trapper Gus wrote:

TravelinMan wrote:

Because if you're too poor or too dumb to not own stocks, then this isn't about you.  You need other help.  This is like debating the effectiveness of bandaids and pointing to the guy who got his arm caught in a wood chipper as your evidence.

That doesn't make sense in a discussion about if stock buy backs are good for the country as a whole?

Furthermore, it is easily argued that stock buy backs are not good for corporations or investors, as they are gaming one of the ways that the performance of the corporations are measured over time, aka the P/E ratio change.  If a corporate management can borrow money to execute a stock buyback, saddling the balance sheet with debt to make the P/E ratio look better, they are hiding their management underperformance.

btw this is wells BS -

Because if you're too poor or too dumb to not own stocks, then this isn't about you. You need other help. This is like debating the effectiveness of bandaids and pointing to the guy who got his arm caught in a wood chipper as your evidence.

please stop doing it.

TravelinMan wrote:

Trapper Gus wrote:

That doesn't make sense in a discussion about if stock buy backs are good for the country as a whole?

Furthermore, it is easily argued that stock buy backs are not good for corporations or investors, as they are gaming one of the ways that the performance of the corporations are measured over time, aka the P/E ratio change.  If a corporate management can borrow money to execute a stock buyback, saddling the balance sheet with debt to make the P/E ratio look better, they are hiding their management underperformance.

btw this is wells BS - please stop doing it.

Wells BS? LOL! OK, gatekeeper. I shall refrain for pointing out the obvious from now on.

Trapper Gus wrote:

TravelinMan wrote:

Wells BS? LOL! OK, gatekeeper. I shall refrain for pointing out the obvious from now on.

Avoiding the topic with BS answers dude.

Really nothing more to say as you are not posting in a serious manner, and not even trying to defend your position.

TravelinMan wrote:

Trapper Gus wrote:

Avoiding the topic with BS answers dude.

Really nothing more to say as you are not posting in a serious manner, and not even trying to defend your position.

Firstly, why do I need to "defend" my position? Are you assuming I'm wrong? That's not the way to have a productive conversation.

Secondly, I think I have provided many relevant, cogent facts that you've simply chosen to ignore because you don't like them.

But I'm the one spewing "BS." LOL. Yeah, you're done here. Bye bye.

Trapper Gus wrote:

TravelinMan wrote:

Firstly, why do I need to "defend" my position?  Are you assuming I'm wrong?  That's not the way to have a productive conversation.

Secondly, I think I have provided many relevant, cogent facts that you've simply chosen to ignore because you don't like them.  

But I'm the one spewing "BS."  LOL.  Yeah, you're done here.  Bye bye.

I don't find your POV, that only stockowners matter, to be an honest one is a discussion about if stock-buy backs are good for the country.  Furthermore, I provided a reason that even just for stock owners they can have drawbacks.

TravelinMan wrote:

Trapper Gus wrote:

I don't find your POV, that only stockowners matter, to be an honest one is a discussion about if stock-buy backs are good for the country.  Furthermore, I provided a reason that even just for stock owners they can have drawbacks.

Stop being an insufferable gas lighting twat.

The people who don't own stock don't factor into this discussion. The guy panhandling on the exit ramp isn't going to benefit from anything other than a psych eval and a hot meal. Let those that are doing the right thing benefit and figure out other solutions for those that aren't.

The people who don't own stock don't factor into this discussion. The guy panhandling on the exit ramp isn't going to benefit from anything other than a psych eval and a hot meal. Let those that are doing the right thing benefit and figure out other solutions for those that aren't.

Trapper Gus wrote:

The people who don't own stock don't factor into this discussion. The guy panhandling on the exit ramp isn't going to benefit from anything other than a psych eval and a hot meal. Let those that are doing the right thing benefit and figure out other solutions for those that aren't.

I think you posted this -

The people who don't own stock don't factor into this discussion. The guy panhandling on the exit ramp isn't going to benefit from anything other than a psych eval and a hot meal. Let those that are doing the right thing benefit and figure out other solutions for those that aren't.

Perhaps I misunderstood your intent.

TravelinMan wrote:

Trapper Gus wrote:

I think you posted this -


Perhaps I misunderstood your intent.

Let me repeat back to you what I'm hearing you say.

"There's this thing that corporations do.  I don't like it despite the fact that many corporations, economists, billionaires, and other smart people all say it's good.  But setting that aside, it only purportedly works for about 1/3 Americans.  So because it doesn't work for the other 2/3 of Americans, we have to take it away from the 1/3."

My point would be - if it's working for 1/3 of Americans, let it be, and let's come up with other solutions to help the 2/3.  

This is not dissimilar to my point in the gun thread.  16 million Americans are doing really well with the current set of laws.  But 1 of them is fucking it all up, so let's punish the 16 million instead of trying to figure out a way to prevent the 1.

Trapper Gus wrote:

TravelinMan wrote:

Let me repeat back to you what I'm hearing you say.

"There's this thing that corporations do.  I don't like it despite the fact that many corporations, economists, billionaires, and other smart people all say it's good.  But setting that aside, it only purportedly works for about 1/3 Americans.  So because it doesn't work for the other 2/3 of Americans, we have to take it away from the 1/3."

My point would be - if it's working for 1/3 of Americans, let it be, and let's come up with other solutions to help the 2/3.  

This is not dissimilar to my point in the gun thread.  16 million Americans are doing really well with the current set of laws.  But 1 of them is fucking it all up, so let's punish the 16 million instead of trying to figure out a way to prevent the 1.

Just to be fair, there are "smart" people on both sides of this argument.

However, many of those on the "pro" side have personal financial gain for themselves as part of their motive, which colors their arguments.

I have pointed out that stock-buy backs allow corporate management to hide poor management performance or to bribe major stockholders into accepting the same. Furthermore. since shareholder return via financial engineering becomes a management focus, stock buybacks reduce management's focus on growing the corporation and / or investing money into improved operations. It also is used to game the tax system, primarily, though not entirely, for people who gain most of their income from capital gains. The tax situation is the fault of the tax code, but still, this reduces federal tax revenues.

The rest of this get into the failures on market capitalism to match its rhetoric of being the best economic system, which in a pure sense it is demonstratable not, and so we live in a "mixed" economic system in which the social welfare parts make up for the failures of the market parts. In this situation stock buybacks avoiding taxes cause the inequalities caused by the failures of the market system to be more difficult to rectify. This is how stock buybacks affect the 2/3rds adversely.

TravelinMan wrote:

Trapper Gus wrote:

Just to be fair, there are "smart" people on both sides of this argument.

However, many of those on the "pro" side have personal financial gain for themselves as part of their motive, which colors their arguments.

I have pointed out that stock-buy backs allow corporate management to hide poor management performance or to bribe major stockholders into accepting the same.  Furthermore. since shareholder return via financial engineering becomes a management focus, stock buybacks reduce management's focus on growing the corporation and / or investing money into improved operations.  It also is used to game the tax system, primarily, though not entirely, for people who gain most of their income from capital gains.  The tax situation is the fault of the tax code, but still, this reduces federal tax revenues.

The rest of this get into the failures on market capitalism to match its rhetoric of being the best economic system, which in a pure sense it is demonstratable not, and so we live in a "mixed" economic system in which the social welfare parts make up for the failures of the market parts.  In this situation stock buybacks avoiding taxes cause the inequalities caused by the failures of the market system to be more difficult to rectify.  This is how stock buybacks affect the 2/3rds adversely.

To be fair, economics is a black science and if you got 30 experts in a room you'd probably have more opinions than flavors of Baskin Robbins.