The most dangerous time since the Civil War

[Kinser79]

(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.

I do have a hypothesis why some companies might do just that, well two really:

1.  A company that has a higher price per share may be more attractive as a long term investment for managed funds (how most retail stock transactions are handled via 401(k) and similar retirment formats);

2.  A company may be retiring capital in the US to raise capital elsewhere..say China or Russia or any other number of emerging markets.

In the case of option 2, the stock market will enter a long term bear market once the majority of boomers retire to attempt to live off their savings and investments.  This will depress the stock market, real estate and other assets in the US.  Other emerging markets have younger populations than the US on average and this is likely to remain the case for some time.  Also there may be a perverse taxation incentive to do just that as well.