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M*: Q&A With John Bogle: Text & Video Presentation
Maybe I missed it, but does John Bogle discuss what impact stock buybacks have had on equities returns and dividend yields? This is especially important when a company finances these stock buybacks with a bond offering. Do we as investors own the bonds that buyback the stock or the now higher priced stock that now has taken on the debt to service these buybacks? Any then there is the hope of repatriating corporate earning into stock buybacks and it's implication of the markets.
From a Forbes article:
“There has been only one major driving force during the market rise of the past eight years: stock buybacks!”
It’s an incredible thought that the driving force of the bull market in stocks may have been these buybacks. It has important implications for investors.
As we move away from a low interest rate environment and less and less QE, many of these financially engineered strategies could negatively impact future investor returns. Are these issues on the radar of smart guys like Mr. Bogle?
Everyone is hoping for a beautiful unwind as the Fed removes QE while at the same time raises interest rates. Not everyone will have chair when the music stops and the cost of capital returns to normal.
Comments
From a Forbes article: Link (2017):
stock-buybacks-the-greatest-deception
and, Link (2013):
why-are-stocks-rising
As we move away from a low interest rate environment and less and less QE, many of these financially engineered strategies could negatively impact future investor returns. Are these issues on the radar of smart guys like Mr. Bogle?
Everyone is hoping for a beautiful unwind as the Fed removes QE while at the same time raises interest rates. Not everyone will have chair when the music stops and the cost of capital returns to normal.