Page 9 of 10 FirstFirst ... 5678910 LastLast
Results 121 to 135 of 137

Thread: Made in China sentiment

  1. #121
    Join Date
    Aug 2013
    Location
    Princeton, NJ
    Posts
    6,479
    Blog Entries
    7
    Quote Originally Posted by Edwin Santos View Post
    Brian, IMO the issue of stock buybacks, even the recent criticism of them, is considerably more complicated than you may think. There are arguments in favor and arguments against. Given your interest in this area, you may find this particular article interesting:

    https://www.investopedia.com/article...ing-or-not.asp

    I felt it laid out some of the pros and cons in an objective way and I hope you find it useful.

    There is a also an interesting accounting interplay between a company's book value and market value that arises out of a stock buyback that the article doesn't cover. Basically when a company buys back its stock, it is driving down it's book value insofar as it's assets are being debited against a credit to the equity side of the balance sheet. The result? A reduction in outstanding equity, hence a short term boost to EPS and a short term boost to stock price, P/E being equal. Is this a bad thing? Not necessarily, but if the incentive for doing so is a boost to executive compensation tied to a stock price boost, the move might not be aligned with a long term investor because it is an undeniable matter of accounting that the result is a smaller balance sheet and a reduction in book value. Most of the time, a long term investor is interested in a growing book value, not a declining one masked by a concentration of outstanding equity.

    Under historically normal circumstances, an excess cash situation like this would have resulted in a dividend. But in recent years, the nature of P/E ratios on stock prices caused some smart people to figure out that buying back stock was an inventive way to boost EPS, and influence stock price (and maybe executive bonuses) in a way that dividends will not do. This is one reason why stock buybacks have become the new dividend as a matter of fashion.

    I say the boost to price is often short term, because usually the market recognizes when a company is buying back stock in lieu of expansion of its business and the P/E ratio will invariably lose some of the growth factor and usually drop, negating the initial price increase. The other question is whether the cash was utilized in this manner in lieu of reinvestment in the business or other deferred capital spending.
    However if the cash had no other uses, and the company feels it's market stock price is not reflective of it's market value, then a buyback can be a perfectly legitimate thing to do. So this is why I say it's complicated.
    Some of the hearings on Capitol Hill have gone into the weeds on this subject, and the criticism runs much deeper than Monday morning quarterbacking in light of Covid-19. Basically the complaints are either misappropriation of Federal subsidy or companies stripping their balance sheets to drive up stock prices and executive compensation as described above.

    To be clear, I'm in favor of stock buybacks, but only based on the right incentives and under the right circumstances. I know we're way off topic, but I'll end it there.
    First, I want to state something which has been taken for granted lately, I'm in no way implying that you are doing this but I want to state it: I can argue for the freedom to do something without agreeing with it's application in every single instance. So, not every time a company does a stock buy back do I agree with it. Infact I rarely agree with them unless the company is clearly under valued. That said I think companies should be doing it now and very few of them are because of the need to retain cash and not look bad in the public's rather short term view.

    What I'm also arguing against is this thing in which we reframe yesterday and hold it to today's standards. The cascading economic effect of the lockdown should not be blamed on economic participants for not foreseeing its possibility and preparing for it. It's an impossible standard to hold a company to and all of this nonsense about how buybacks and dividends are to blame is just a way to argue for the (unwanted) government intervention into how companies reward their stakeholders. Shareholders bear the risk of everything including and especially black swan events.

    I am aware of the boost to EPS. If you're taking shares out of the market, clearly the EPS will rise. This is quoted pretty routinely as a benefit but I think its a dubious point as anyone aware of the fact that they're doing this (every single analyst who covers the company would be aware of it) is going to adjust for it in their comparisons. Most 'cash cow' style public companies buy back stock on the regular, the majority reason why they do this is because it is considerably more flexible than dividends.

    Investors, such as myself, will punish a high dividend payer for cutting their dividend. As example ConocoPhillips slashed their dividend in 2016 and the stock dropped tremendously in the days that followed. By comparison when a company stops a buyback program in the near term investors rarely complain and it typically has no effect on the near term stock price. Dividends are clearly a commitment that buybacks aren't, for that reason buybacks are preferred as the flexible option for clearing out an excess cash problem.

    CEO's don't make these sort of decisions in a vacuum or by decree, these are typically something the board must be in approval of, that limits the opportunity for someone to manipulate these sort of things in a way that benefits them and damages the shareholders. Normally the shareholders would vote that person out in rapid fashion. The entire purpose of the executives in a company is to do what benefits the shareholders, most executives are themselves shareholders so they're incentivized to do so. This may seem like a naive point of view given how much grief that position takes in popular culture, but it is indeed their purpose.
    Last edited by Brian Holcombe; 05-24-2020 at 12:37 AM.
    Bumbling forward into the unknown.

  2. #122
    Quote Originally Posted by Edwin Santos View Post
    To be clear, I'm in favor of stock buybacks, but only based on the right incentives and under the right circumstances. I know we're way off topic, but I'll end it there.
    This whole thing would be moot if companies were given their stimulus in the form of debit cards.

  3. #123
    Join Date
    Mar 2010
    Location
    Somewhere in the Land of Lincoln
    Posts
    1,170
    This has been an interesting read. Some great thoughts here. Some people subtly loathe this great country but yet they are here "cashing" in. Hmmmm The fact is whether there are still apprenticeship programs in place or not in some areas that we are running short of those who are willing to get their hands dirty. I have an awesome job for a "BIG" company. Am I a number to them? Definitely! I have traveled to a lot of areas in my job. I have met lots of good people and some not so good. Something that sticks in my mind though is the legal immigrants I have met in my travels. They are happy to be here and don't mind working to get ahead. They don't complain that the handouts aren't enough. They aren't looking for handouts. Only the opportunity to make it on their own. There are as many different opinions as there are people on SMC. What's great is this country allows you to express them. We might only agree to disagree. To bad that isn't acceptable anymore. Seems like for some it's all about shouting louder than someone else than to respectfully have a difference of opinion. That troubles me and that seems to be the common theme these days. Are millennial's given a bad rap? Yes and no. Clearly a situation where all get grouped as a whole but many are as hard working as any of us. That can be said of every group of us. Australia is a great country/place no doubt. Lot's to like there. Just remember that every rose also has thorns. I know my post is all over the place. I'm not as intellectual or articulate as some of you. All the best to you just the same.

  4. #124
    Join Date
    Feb 2008
    Location
    E TN, near Knoxville
    Posts
    9,615
    Quote Originally Posted by Ronald Blue View Post
    ... Seems like for some it's all about shouting louder than someone else than to respectfully have a difference of opinion. ...that seems to be the common theme these days...
    I might use that statement.

  5. #125
    Join Date
    Mar 2003
    Location
    Upland CA
    Posts
    4,617
    I hope people in other countries will read about how bad this one is, and quit trying so hard to get in.
    Rick Potter

    DIY journeyman,
    FWW wannabe.
    AKA Village Idiot.

  6. #126
    Join Date
    Feb 2003
    Location
    Lewisville, NC
    Posts
    1,187
    Quote Originally Posted by Rick Potter View Post
    I hope people in other countries will read about how bad this one is, and quit trying so hard to get in.
    A Sensible thought......it isn't sooooooo complicated. Simple proof.
    Jim

  7. #127
    Quote Originally Posted by Rick Potter View Post
    I hope people in other countries will read about how bad this one is, and quit trying so hard to get in.
    At the rate things are going, we will be needing them.

    Just say, The economy starts on the ground floor. Etc.

  8. #128
    Join Date
    Dec 2008
    Location
    WV
    Posts
    3,926
    Quote Originally Posted by Ronald Blue View Post
    Some people subtly loathe this great country but yet they are here "cashing" in. Hmmmm The fact is whether there are still apprenticeship programs in place or not in some areas that we are running short of those who are willing to get their hands dirty

    These statements (heard regularly) always give give me pause as they seem to be quickly tossed out, but simply dont add up.

    The notion that one who pays taxes to support a country and has any ounce of commentary pertaining to the country itself or the corporations that run the country, in regards to its/their shortcomings, mistakes that seemingly are never learned from, and so on, yet the inidvidual is working, supporting their country directly, are somehow "cashing in" is a bit ludicrous. I dont think a lot of people in this country are of the notion that they are "cashing in". They are working their butts off, paying taxes, paying into the economy on a daily basis, and see horrifically bad mistakes and decisions being made that either impact them directly (a selfish conscience) OR impact others unfairly (a compasionate conscience) or a mixture of both (the majority of the country).

    Statements like this reinforce the notion of "sheep". That have no position in life other than to wander the field and wait to be herded and sheared. Thats not the United States of America. "They" are suppose to be the sheep, and "We" (the people) are suppose to be the shepherds. Far too often the right seems to want to flip that equation because they want to be the shepherd and cash the big checks.

    Its a "throw up in the back of your mouth" moment when every time one of these conversations comes up you have to hear/read some amalgamation of the mindblowingly cool scene https://www.youtube.com/watch?v=wtpOtFIEkbs as if if you are to question anything about the US while paying your taxes you are treasonous. When I feel that corporations, and politicians who are allowed legal insider trading rules, and on and on, selling their country down the river for obscene corporate and personal profit is pretty much in the same camp.
    Last edited by Mark Bolton; 05-25-2020 at 12:45 PM.
    Sometimes I just want to look at pretty pictures,... Thats when I go to the Turners Forum

  9. #129
    Join Date
    Dec 2008
    Location
    WV
    Posts
    3,926
    Quote Originally Posted by Doug Dawson View Post
    At the rate things are going, we will be needing them.

    Just say, The economy starts on the ground floor. Etc.
    There is no "at the rate we are going". They have been needed for 20+ years. Your green bell peppers would cost $20 a piece, citrus fruits, produce, apples, would be gold bars for the majortiy. Farmers here for years have had to advertise for domestic help prior to hiring migrant workers, no one applies, or if they do they never show, or dont make it to the first coffee break leaving never to come back. Talk to a brick mason crew, or concrete finisher. The vast majority cant find help to save their lives. One of my old finishers has contracted with a firm that specifically, and legally, brings in workers. They work his best men into the ground. The mill my hardwood comes from (3 million board feet on the yard at any given time) had zero choice other than to bring in migrant workers. They crush the locals. They ask to stay late (off the clock), come in early (off the clock), they want to work all weekend to help out.

    The Malcom's children of the world, while they may work their butt's off for their family, or perhaps if they are doing something they enjoy or feel rewarded by, may well be great performers. But there is a pretty clear understanding that the vast majority do some hard scale-factoring once they are hired and performance/application/passion will take a pretty hard dip in short order.

    Comes right back around to insinuating that we can lock the borders and "keep it all in-house". Try it. You will have zero help and your production will be in the ditch in a heartbeat. The workforce just isnt here, and hasnt been here, for 20, perhaps more like 30 years. I can remember being in my teens in the 80's and orchards were bringing in migrant workers to harvest fruit solely because no one would work. It had nothing to do with pay scale.
    Last edited by Mark Bolton; 05-25-2020 at 5:08 PM.
    Sometimes I just want to look at pretty pictures,... Thats when I go to the Turners Forum

  10. #130
    Quote Originally Posted by Mark Bolton View Post
    There is no "at the rate we are going". They have been needed for 20+ years. Your green bell peppers would cost $20 a piece, citrus fruits, produce, apples, would be gold bars for the majortiy. Farmers here for years have had to advertise for domestic help prior to hiring migrant workers, no one applies, or if they do they never show, or dont make it to the first coffee break leaving never to come back. Talk to a brick mason crew, or concrete finisher. The vast majority cant find help to save their lives. One of my old finishers has contracted with a firm that specifically, and legally, brings in workers. They work his best men into the ground. The mill my hardwood comes from (3 million board feet on the yard at any given time) had zero choice other than to bring in migrant workers. They crush the locals. They ask to stay late (off the clock), come in early (off the clock), they want to work all weekend to help out.

    The Malcom's children of the world, while they may work their butt's off for their family, or perhaps if they are doing something they enjoy or feel rewarded by, may well be great performers. But there is a pretty clear understanding that the vast majority do some hard scale-factoring once they are hired and performance/application/passion will take a pretty hard dip in short order.

    Comes right back around to insinuating that we can lock the borders and "keep it all in-house". Try it. You will have zero help and your production will be in the ditch in a heartbeat. The workforce just isnt here, and hasnt been here, for 20, perhaps more like 30 years. I can remember being in my teens in the 80's and orchards were bringing in migrant workers to harvest fruit solely because no one would work. It had nothing to do with pay scale.
    So weíre in agreement then. :^)

  11. It isn't Covid that is changing my buying habits. Its the whole idea that China is using the US and its consumers. I would appreciate it if sellers would state the origin of their products! I can only assume it is China if no declaration is made.

  12. #132
    Join Date
    Mar 2005
    Location
    Anaheim, California
    Posts
    6,037
    Quote Originally Posted by Fred Vandecoevering View Post
    I would appreciate it if sellers would state the origin of their products!
    Two words: "supply chain". You might as well not buy anything from anywhere, given that, for any product more complex than a shovel, "country of origin" is ambiguous at best.

    I'm reminded of the old joke about the guy who complains to his wife about her bearing him daughters instead of sons. She explains about X/Y chromosomes and how the gender of their children is really his fault, to which he replies, "It's the person's fault who had it last."
    Yoga class makes me feel like a total stud, mostly because I'm about as flexible as a 2x4.
    "Design"? Possibly. "Intelligent"? Sure doesn't look like it from this angle.
    We used to be hunter gatherers. Now we're shopper borrowers.
    The three most important words in the English language: "Front Towards Enemy".
    The world makes a lot more sense when you remember that Butthead was the smart one.
    You can never be too rich, too thin, or have too much ammo.

  13. The prejudice against the products of some countries and in favor of homeland made products is certainly understandable. I had an elderly neighbor (died two years ago) that experienced horrible time in WW2 and was there to "liberate" one of the concentration camps. He would avoid anything German. He is one of the few that obsessed that the Volkswagon was Hitler's concept of an inexpensive people's car. He thought anyone who buys or drives one is a traitor to the 6 million killed in the camps and referred to the cars as Naziwagons.

  14. #134
    See why I fully empathize with and respect the sentiments of a holocaust survivor I donít get the it. In the case of the and to the the actually survivor sure.

    But behind that bit at all. Itís like to say that every Chinese person is bad because they are forced to do as they do and represented by Xi. Or that every German was in support of and behind the Holocaust. Or in our case currently, what of other nations stated viewing our so called wonderful country as tyranical ďas it currently is and stated boycotting out goods in the name as every Mercan agreed with and supported the guy in the White House.

    Seems like such a short sighted perspective. To group together a whole nation of people simply because the person in charge of them will ďoff with their headsĒ if they donít do as there told well thatís just lacking in basic common sense imop..

    But what do I know Iím just a privileged mercan. And that much I actually mean..

    Quote Originally Posted by Perry Hilbert Jr View Post
    The prejudice against the products of some countries and in favor of homeland made products is certainly understandable. I had an elderly neighbor (died two years ago) that experienced horrible time in WW2 and was there to "liberate" one of the concentration camps. He would avoid anything German. He is one of the few that obsessed that the Volkswagon was Hitler's concept of an inexpensive people's car. He thought anyone who buys or drives one is a traitor to the 6 million killed in the camps and referred to the cars as Naziwagons.

  15. #135
    Join Date
    Aug 2013
    Location
    Princeton, NJ
    Posts
    6,479
    Blog Entries
    7
    America is the melting pot, so retaining manufacturing jobs by requiring a level playing field for trade actually goes a long way toward offering opportunities to a broad range of folks in the US.

    Trading is generally good, it increases competition which lowers pricing while theoretically making a better product. When one trading partner is held to rigid standards across the board and the other is held to very few standards then the situation is untenable for one trading partner.

    We want a lot but really aren’t interesting in putting policy in place that actually supports our common goals. If human rights and decent working environments are a priority than one must hold their trading partners to the same standard or one is then simply taking away opportunity from those enacting good conditions in favor of those who ignore them.
    Bumbling forward into the unknown.

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •