Here's why Sens. Schumer and Sanders are wrong on stock buybacks

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Two U.S. senators criticized $4 trillion of share buybacks completed from 2008 to 2017. It is important to understand that this very large amount of cash did not vaporize, nor did it benefit just a small handful of people. Rather, it was used to positively impact the U.S. economy overall.

Sens. Schumer and Sanders also forget to note that those who sell into a share buyback do so of their own free will based on their desired asset allocation.

Additionally, we all benefit from the re-circulation of the $4 trillion of the cash from the share buybacks. They hold that if a corporation has excess cash, it should look to invest the cash in its business only if the investment can return its cost of capital or greater. If it cannot, the corporation should return the cash to the shareholders and let the owners determine how to reinvest the cash according to their own risk/return profile.

Corporate share buybacks initiated by corporate executives performing their duties on behalf of their owners offer many benefits, and they are widely spread across the U.S. economy.

 

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Two idiots bent on destroying America’s financial might

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