Boeing share price was up almost 400% in that period. If the business goal was to maximise share price and therefore return for investors over that period it was a cracking success.
Since the US government will always pick up the pieces in the event of a failure its a minimal risk stratagy.
And yes, people track that, and yes taking loans to pay dividends is a favorite trick of dying companies.
Ordinary people have to sell assets to take advantage of appreciation. So unless they can time sales to optimize taxes - really only an option for retirees - they might as well get regular dividends.
Not entirely true.. Ordinary people can take advantage of appreciation of their home value via a standard home equity loan.
Also rich people get way, way lower interest rates borrowing against their assets than us poors do on HELOCs.
> No one's talking about houses here. I thought that was obvious.
For most ordinary Americans, the largest asset they will ever own is their house. Owning that asset is the essence of the old American Dream. So it seems like your original comment was primarily about housing assets.
Anyone can get a home equity loan to access the appreciation the house might have. They don't pay taxes on the loan, and many people use the money on improvements that further increase at value of the asset. That combined with further asset appreciation and the loan pays for itself when the house is later sold.
Ordinary people can and do do this. The rich just do it at a much larger scale.
Finally primary homes don't have any capital gains tax on sale (or at least not up to a pretty high limit). So this whole discussion is irrelevant. Ordinary people can always sell their "biggest asset" without paying much in tax.
Eliminating the double taxation of dividends would likely solve most of the buyback problems.
A stock buyback of 1000 shares means that your one share now represents 1/999,000th of the company, not 1/1,000,000th. Thus the share is worth more. It isn't income until you sell the share and pay taxes on the gains. This flexibility is useful and can result in tax savings depending on the situation.
Stock buybacks are cashing in your chips, a one-off payment.
This is not true, but seems to come up a lot. I guess it makes for one of those fun "internet facts" that people like to repeat without any investigation. Bonus points for blaming Reagan.
Stock buybacks were not illegal before 1982. If you sit down even think through it, it doesn't even make sense they were illegal. Just like issuing new shares (or doing a stock split), companies have legitimate business needs to buy back stock (reduce the quantity of outstanding shares).
What happened in 1982 was that the government made Rule 10b-18, which outlined the "safe harbor" requirements for stock buybacks, where if followed, the company could not be found liable for stock manipulation.
https://www.skadden.com/-/media/files/publications/2020/03/t...
So stock buy backs were legal before 1982, but companies faced a risk of stock manipulation if they were reckless in how they did it.
Sounds like a much better state of affairs.
I think that's a good thing. I'd rather have it be clear to all parties what is acceptable and what isn't, rather that a murky legal framework where you never know if you're breaking the law.
Stock buybacks were legal and happened before 1982.
The “thanks Reagan indeed” is just your own internal biases. The President didn’t draft the law and the Democratic Congress passed it.
So quite odd to blame a single person.
It should be a warning against believing things on the internet because they conform to your biases. Check your sources.
And you keep acting like the 1982 law had no effect when it made the largely marginalized practice of stock buybacks mainstream. Maybe you should check your biases.
https://corpgov.law.harvard.edu/2020/10/23/the-dangers-of-bu...
https://crsreports.congress.gov/product/pdf/LSB/LSB10266
https://www.vox.com/2018/8/2/17639762/stock-buybacks-tax-cut...
https://www.sciencedirect.com/science/article/abs/pii/S01651...