a thoughtful web.
Good ideas and conversation. No ads, no tracking.   Login or Take a Tour!
comment by b_b
b_b  ·  3343 days ago  ·  link  ·    ·  parent  ·  post: What the bond market knows that the stock market doesn't

Have you ever seen a decent rationale for issuing debt for the sole purpose of buying stock or issuing dividends? It's a widely accepted practice, but I've never seen anyone explain it in a way that doesn't make me scratch my head. Even Apple, they of $150 billion in cash reserves overseas, issued something like $17 billion in debt in 2014 (or thereabouts) for no other reason than to up their dividend.

I think stock manipulation is the only reasonable explanation. What else could it be. FICC trading makes a lot of people a lot of money, so the more fixed income securities there are to play with, the more traders can buttfuck each other. The gun-to-the-head tactics of so called "activist investors" seem to be calling the shots in many of these cases, but I don't think they're going to be leaving many of their targeted companies in better shape than they found them. As the nihilistic saying in trading goes: I'll be gone; you'll be gone.





mk  ·  3343 days ago  ·  link  ·  

Seems to be to make money for the shareholders. Of course, Apple and company can say that they need to have an attractive dividend to increase investment, but the line between attracting investors and bleeding the company has probably been crossed in many cases. Still, the argument could be made that any corporation is just a money-making project, and if debt is cheap, then they should take advantage of it.

b_b  ·  3343 days ago  ·  link  ·  

    ...if debt is cheap, then they should take advantage of it.

A lesson Congress can never really wrap its tiny mind around.

whanhee  ·  3342 days ago  ·  link  ·  
This comment has been deleted.