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Agree @SenWarren that the stock market should be a place that finances company formation AND is friendly to the individual investor but disagree with you on share buybacks. https://www.cnn.com/videos/politics/2021/01/31/sotu-warren-full.cnn
You lambasted share buybacks as a way that companies manipulate their stock prices. This is a common misunderstanding on the left and should be dropped from the rhetoric.
A share buyback and a dividend are THE SAME THING. They both return capital to all shareholders - including individual investors. A dividend does this by handing cash to shareholders.
A stock buyback does this by decreasing the number of shares outstanding which, by definition, raises the price per share. This causes the stock price to appreciate which benefits all holders.
If $1M is paid to investors as a dividend and everyone gets, say 50 cents, or $1M of stock is bought back raising the share price by 50 cents, there is no economic difference.
Both transactions benefit shareholders and regulating away share buybacks remove a tool that companies use to return value to shareholders.
What could be regulated is when share buybacks occur but as we will see - even this is a fool’s errand. If a company’s shares are wildly overpriced and the company is still buying back shares, they are misallocating capital and diluting the value of their shareholders.
This is like issuing a dividend but instead of doing so in cash, doing so with a gift certificate that can only be used to buy shares in the company.
The good news - this is one of the easiest possible capital misallocations to observe and when investors see this, they actually sell shares. This isn't an activity that needs to be regulated, it is one of the shining examples of the market self-regulating via supply and demand.
There are plenty of areas of the market that would benefit from regulation - SPACs are one.
Drop this share buyback rhetoric @SenWarren, which is a distraction, and focus on the goal we both share - to make the stock market a place that finances company formation and is friendly to the individual investor.
