The Stock Market Is Not The Economy Thread II

**Melena** · 2023-02-06 23:40

I rarely run into this thankfully as I typically do late showings.

Think the last time I heard talking during a movie when I saw Terrifier 2 and someone finally broke and yelled "How are you still alive?!"

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**6souls** · 2023-02-07 02:41

https://twitter.com/AP/status/1622840123401412608

**Spicyryan** · 2023-02-07 09:24

https://twitter.com/unusual_whales/s...QhAk5U4Jg&s=19

Those NANC returns should be lit.

**6souls** · 2023-02-07 12:54

https://twitter.com/sarahmillerdc/st...93082423980034

**Buffy** · 2023-02-08 01:00

Why are stock buybacks bad?

**Yabby** · 2023-02-08 04:50

Prioritizing short-term financial gains: Companies may prioritize stock buybacks over long-term investments in research and development, infrastructure, or employees, which can negatively impact their future growth potential.

Widening income inequality: Stock buybacks primarily benefit wealthy shareholders and executives who own large amounts of company stock, rather than everyday workers or the broader economy.

Limiting investment opportunities: When companies buy back their own stock, they are removing shares from the market, which can limit investment opportunities for others and potentially drive up stock prices to unsustainable levels.

Diverting funds from other uses: Companies may use funds that could be used for investments or paying dividends to instead buy back their own stock, which can be seen as a waste of resources.

It's important to note that not all stock buybacks are inherently bad and the effects can depend on the specific circumstances and motivations behind them.

**Byrthnoth** · 2023-02-08 07:06

I'd say in this example they're making the point that Norfolk Southern's board invested 7.5 billion in indirectly enriching themselves instead of investing in whatever maintenance lapsed and created this problem. Obv. it's on twitter so they're jumping the gun to get the tweet out there hot from the oven, but if it's eventually shown that this accident was the result of skipped maintenance or disinvestment in safety / staffing, they would be correct. That isn't particularly unlikely.

Basically, the only thing that stock buybacks do is drive the stock price up. If there's truly no better way to spend the money, you are sending a very strong signal that your company is internally doing well (and you aren't creative enough to think of a better way to increase stock prices.)

If I was going to make the argument, I would say that there's inherently a conflict of interest when making the decision to buy back stocks because the street does not have perfect operational information about the company to the extent that the largest shareholders (frequently on the board) do. Thus, they can sacrifice the future of the company for a near-term boost in their wealth, which they can use as collateral for loans even if they don't sell it. This is basically the same argument as one would make against boardmembers holding a stake in the company they are boardmembers of, or the argument that a few workers (who have long-term interests and typically little stock) should be seated on boards (i.e. Warren's idea).

**Spicyryan** · 2023-02-08 09:40

Originally Posted by Buffy

Why are stock buybacks bad?

Holy shit.

**Day** · 2023-02-08 10:28

someone asking a question is not worth all that excitement boss

**zoobernut** · 2023-02-08 10:45

I think the biggest fallout is when wages at a company are stagnant and then they spend billions in stock buy backs. Or they lay off a bunch of people then do a stock buy back. Or they raise prices on the goods they sell/create and then do a stock buy back. All scenarios we have seen recently.

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**kuronosan** · 2023-02-08 11:04

Originally Posted by Buffy

Why are stock buybacks bad?

Because they're not investing in company growth, they're increasing the value of shares.

**6souls** · 2023-02-09 00:56

https://www.cnbc.com/2023/02/08/disn...anization.html

Disney to layoff 7k across D+, ESPN, and it's parks division. They're also cutting $3B non-sports content and another $2.5B in non-content resources.

**Spicyryan** · 2023-02-09 11:04

Maryland lawmakers recently introduced a bill to test out a four-day workweek.

The bill proposed creating a pilot program within the state’s Department of Labor that would promote and incentivize the adoption of a four-day workweek.

As part of the pilot program, businesses with at least 30 employees who transition to a 32-hour work week without cutting worker pay or benefits will be eligible for a state tax credit.

https://www.google.com/amp/s/thehill...-workweek/amp/

If only...