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Politics : Ask Michael Burke

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To: BGR who wrote (71297)	12/2/1999 3:10:00 PM
From: Michael Bakunin	Read Replies (1) of 132070

..wait ..wait -- you're an indexer, and scoff at the broad US market? That smacks of.. of.. subjective valuation. -g- We can talk about whether or not the NASDAQ deserves its premium to the broad market another time; it has little to do with the equity premium on US stocks. You can argue, I suppose, that buybacks will goose dividend-per-share growth above secular growth. More simply, assume they're tax-advantaged dividends. Say buybacks approximate dividends; cash yield plus buybacks goes to 2.6% -- and your expected return leaps from 6.3% to 7.7%. Looked at corporates lately? Even accounting for the tax advantage of capital gains versus income doesn't push this much higher. -mb

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