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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: Mike da bear who wrote (14241)	2/21/1998 4:37:00 PM
From: Bonnie Bear	Respond to of 94695

Mike: quote from my finance book: "As an alternative to paying cash dividends, a firm may distribute income to stockholders by repurchasing its own stock....Assuming the repurchase does not adversely affect the firm's earnings, the earnings per share on the remaining shares will increase, resulting in a higher market price per share, which means that capital gains will have been substituted for dividends." In other words, stockholders don't want dividends, because Uncle Sam takes most of it in taxes, and book value (plant, buildings, assets) doesn't appreciate for the stockholders for the same reason houses don't make good investments except as a hedge against inflation, so the companies have cut down their book values as much as possible, reduced dividends, and use financial tools like buybacks and mergers to increase earnings. The house of cards will fall if we get into a recessionary/inflationary situation like 1980/1990 again. It's assumed that if people want dividends they will buy income rather than growth products (bonds, utilities)