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Q2 2006

Stock buybacks continue at record levels

Reckless corporate behavior continues ...

Net share repurchases by nonfinancial nonfarm corporations ran at an annual rate of $554.8 billion, about the same level as in Q1 2006 and more than ten times the level of 2001 and five times the level of 2000, the peak of the Great Bubble. Amounts paid to exiting shareholders (including holders of executive options and short sellers) exceeded amounts paid equitably to all shareholders as regular dividends by 44%.

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Stock buybacks

Warren Buffett attacks buyback schemes

In the 2005 Berkshire-Hathaway annual report, Warren Buffet points to the unethical aspects of the buyback-option schemes so common in the US stock market. He noted that "Too often ... the deck is stacked against investors when it comes to the CEO’s pay. ... every dime paid out in dividends reduces the value of all outstanding options"
More ...

Securities Analysis

Does ‘SEC Total Return’ protect investors?

Millions of investors put money for retirement into mutual funds selected on the basis of "SEC total returns" and the name of the fund. This article explains how the SEC allows funds to use this misleading statistic to the detriment of investors and to the benefit of fund managers. More ...

US Politics

President Obama's Lincoln moment

In mid 2009, Barack Obama found that Lincoln's saying, "You can't fool all of the people all of the time," applied to his presidency. Profligate spending and unpopular health reform ended Obama's honeymoon. More ...

US equities

Stocks surge on spurious earnings

In Q1 2009, stock buybacks came back, driving up equity prices and sparking a rally by dominating a thin market. These equity repurchases were financed from depreciation reserves and bond issues. More ...

US Bonds

Bond demand exceeds supply for a decade

Over the decade, 1995-2004, the demand for US bonds of all types has surpassed new bond issues in eight of the last ten years. This is the reason that bond prices have held firm, even in 2003, when net new issues reached almost $1.8 trillion. More ...

World Economy

Signs of US losing its groove?

Thirty years ago, US income from abroad was more than double the amount of income that the US paid to the rest of the world. This year, or the next, this foreign income surplus may disappear forever. Is the US 'losing its groove'? More ...

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October 2006
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2010-09-07 16:04