Zeev,
Re: market or stock valuation, you said:
the "overvaluation" test based on
"punny" dividends, should be corrected for buy backs. The $4 Billions buy back (over
the next 12 months) just announced by GM is nothing but a net 15% after tax
dividends to GM stockholders (A bear market bottom rate of payment). Similar
announcements since last October by IBM, MRK and I believe GE, really make the
DOW, based on true after tax cash dividends, look quite cheap.
I may be simple minded, but I fail to see how buying back one's stock in the market (with money which should be paid out as dividends) actually increases "value", as if the company were making better or more or cheaper products. It actually seems more like manipulation to me, that is, pumping up the price with a buy program. Isn't this what market manipulators did in the 1920s? Is it coincidental that the major executive option holders benefit the most with this manipulation? I know all the stockholders get a warm glow when they see the price rise, but don't you have to sell the stock to actually reap the reward? And what will happen when all the stockholders want to reap the harvest they have watched grow?
Just some thoughts from a pre "new era" Neanderthal.
Jack |
