Image Credit: Alex Nabaum
By Jason Zweig | July 5, 2019 11:00 am ET
Share buybacks are as American as mom, apple pie and hot dogs on the Fourth of July.
You’d never guess that given the many politicians on both the left and the right who say share repurchases are a newfangled, evil spawn of deregulation. Buybacks, argue their critics, barely existed before the Securities and Exchange Commission changed a rule in 1982 and unleashed a multi-trillion-dollar torrent—enriching fat-cat investors, starving workers and stunting the long-term prospects of the companies buying back all those shares.
To call this argument baloney would be an insult to cold cuts. When American companies began repurchasing shares from their investors, Alexander Hamilton was treasury secretary—and corporations have been buying back stock, often a little and sometimes a lot, ever since….
To read the rest of the column:
For further reading:
Benjamin Graham, The Intelligent Investor
Jason Zweig, The Devil’s Financial Dictionary
Jason Zweig, Your Money and Your Brain
Jason Zweig, The Little Book of Safe Money
Articles and other resources:
Cliff Asness et al., “Buyback Derangement Syndrome”
Alex Edmans, “The Case for Share Buybacks”
Michael J. Mauboussin, “Share Repurchase from All Angles”
Michael J. Mauboussin and Dan Callahan, “Disbursing Cash to Shareholders”