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Strategies & Market Trends : Waiting for the big Kahuna
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To: Snowshoe who wrote (9295)11/6/1997 11:20:00 PM
From: Bilow  Read Replies (3) of 94695
 
Companies buy back their own stock:

many of the trusts (like mutual funds, but traded on the
stock market) used their available cash in a desperate effort
to support their own stock. However, there was a vast difference
between buying one's own stock now when the public wanted
to sell and buying during the previous spring - as Goldman Sachs
Trading Corporation had done - when the public wanted to buy
and the resulting competition had sent prices higher and higher.
Now the cash went out and the stock came in, and prices were
either not perceptibly affected or not for long. What six months
before had been a brilliant financial maneuver was now a form
of fiscal self-immolation. In the last analysis, the purchase by a
firm of its own stock is the exact opposite of the sale of stocks.
It is by the sale of stock that firms ordinarily grow.

The Great Crash 1929 by John Kenneth Galbraith

page 124

-- Carl
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