In response to IBM buy back, I had the same reaction. The shares are hardly dirt-cheap.
Furthermore, assuming for the sake of argument that IBM stock is cheap, it still makes no sense to anounce a buy back while the market is tumbling. Why not wait for an even cheaper price before annoncing a buy back? Just to be nice? Just to bail out the market?
Cant' be big blue--or big anything else--without relying on and using the govt for all sorts of things. I suspect IBM was told that it would be a good idea to make the announcment.
My money manager/analyst friends also told me about a rumor circulated on Tuesday that Intel was also about to anounce buy-back. Intel denied it the next day.
On a related matter....
It's been clear to me for a while that the gov't has a stake in depressing the price fo gold. Without confidence, the economy would unravel, and a high gold price is a huge vote of no confidence in paper currency. Particularly the dollar, which is the reserve currency for so many central banks. A high gold price--like that of the Carter years--is the people's way of saying that what the govt has decreed "legal tender" has becomr enough of a farce that they are nevertheless forced to a more rational medium of exchange. Just as the east block folks were forced to use dollars and marks conduct waht economy there was--regardless of what was decreed legal tender.
When the govt is forced to inflation, and the dollar is seen for what it is, what more rational means of exhange will there be? The currencies of other govts are subject to the same whims and fluctuation that the dollar is. Me thinks gold will reassert itslelf in the not-so-distant future.
We are currenltly in a period that the powers that be will view as dangerous. If money flows out of the market, it has to flow somewhere else (perhaps gold). If the economy weakens, lower tax revenue will make payement on the national debt more difficult (perhaps resulting in inflation). If the Asians stop buying our debt, we face a similar crisis.
Expect lots of "special coverage" and shiny, happy people.
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