04-27-2015, 09:53 AM
(04-27-2015, 09:44 AM)Kerim Wrote:(04-27-2015, 09:14 AM)Roadmap2Retire Wrote: Here's a video from HBR that illustrates the point well.
https://hbr.org/video/4102770682001/the-...k-buybacks
Hmmmmmmmmmmmmmm. There are certainly some interesting points in the video, but overall seems like really really reckless and biased. It seems to take as an underlying assumption that companies have a duty to do more than generate profits for shareholders. There can and should be reasoned discussion and argument about whether this is (or should be) the case, but that video is hardly taking an objective look at the question.
Granted that the video is a bit biased considering its a short video. But when the consensus from everyone else is that "buybacks are good", its good to have an opposing viewpoint.
Quote:(04-27-2015, 09:14 AM)Roadmap2Retire Wrote: So, the question you should be asking is: if the company is buying its own stock and execs/insiders are selling, should you be buying?
There is a lot of truth to the old saw that there are many reasons that insiders sell stock, and most of them tell you little about the performance of the company.
Most executives are compensated via stock options (with cash compensation just a small part of the whole package). Exercising those options is pretty much the norm. The underlying problem is that the decisions are taken by the board to authorize these buybacks instead of thinking long term.