03-21-2018, 10:22 PM
(01-22-2018, 11:57 AM)David Horn Wrote:(01-21-2018, 05:51 AM)Kinser79 Wrote:(01-18-2018, 03:32 PM)David Horn Wrote: With the exception of new stock offerings, of which there are very few, stock markets trade old shares for new money. The capitalization of those old shares occurred in the past -- often in the distant past. To be honest, the opposite is happening right now. Old shares are being purchased by the corporate treasuries that issued them and are "banked" by those corporations to prop-up the price of the remaining shares. That could be called capital retirement.
While the majority of sales on the stock market are value based speculation the main function of a corporation to offer stocks in the first place is to raise capital. Which as Galen has pointed out elsewhere is more difficult due to inflation and taxation.
Capital retirement is utterly retarded. I don't even know where to begin. The purpose of having capital is to use it to produce a commodity to sell at a profit and render more capital, ad infinitum.
I'm unsure as to the reasons why corporations would buy back their stocks to prop up the price, but I know that retiring their capital is not the reason. Unless of course the purpose is to ultimately destroy the company itself--which given the self-destructive tendencies of Boomers is not unheard of.
<SNIP>
Look, stock is either bought and sold by inventors looking to make a gain, or it's purchased by the issuing company to pump stock prices. If the latter, then the money paid is typically reinvested in other stock, pumping that price too. At some point, the value of the shares is dramatically less than the price of the shares, and the market drops ... sometimes precipitously. By historic standards, that should be soon.
True. Former investors in the stock bought-up are not likely to simply take their gains and buy consumer goodies. They have typically been living off the dividends, and they are likely to bid up blue-chip stocks. But buying up stock means selling off cash reserves, which will make the company less liquid.
New offerings imply an intention of expansion through capital investment or the acquisition of other firms (as with a Pennsylvania-based general retailer buying out a somewhat-similar retailer in North Carolina in a very different market. So MNO buys out PQR and 'retires' PQR through absorption).
The ideal subject of totalitarian rule is not the convinced Nazi or the dedicated Communist but instead the people for whom the distinction between fact and fiction, true and false, no longer exists -- Hannah Arendt.