With the buybacks, an investor who owns 100 shares over the long duration will likely see the price increase because of higher demand. However, if stock dividends are issued, they might now own 101 shares which let's say are equal in value to the 100 shares that have gone up in value too, but the big difference is person who owned 10 million shares now owns 100,000 new shares. Technically their proportional ownership hasn't changed, but when you look it at the clearing house level: with those 100,000 new shares - that person can open a brokerage and manage the business of someone who buys 10,000 shares, another person who shorts 10,000 shares - and at no additional risk since they cancel each other out. Voila - risk management for the super rich. I believe ultimately the reason they are different boils down to psychology. Someone who owns 1 share in a company is going to feel a lot happier than someone who owns .1 shares even if the market value is the same. Although arguably the biggest effect is that the super rich people never sell their hedged shares and keep collecting them while the person with the 401k is forced out of their position (actually required to liquidate after a certain age) at a rate that diminishes their wealth faster than their dividends are issued.
Dividend is profit sharing. I’m investing in a company to grow it’s business and make profit and get a profit share or if the company value increased, sell my shares in higher price. Buying back is using the company profit to buying back the shares outside?? That’s a dirty game?
With the buybacks, an investor who owns 100 shares over the long duration will likely see the price increase because of higher demand. However, if stock dividends are issued, they might now own 101 shares which let's say are equal in value to the 100 shares that have gone up in value too, but the big difference is person who owned 10 million shares now owns 100,000 new shares. Technically their proportional ownership hasn't changed, but when you look it at the clearing house level: with those 100,000 new shares - that person can open a brokerage and manage the business of someone who buys 10,000 shares, another person who shorts 10,000 shares - and at no additional risk since they cancel each other out. Voila - risk management for the super rich.
I believe ultimately the reason they are different boils down to psychology. Someone who owns 1 share in a company is going to feel a lot happier than someone who owns .1 shares even if the market value is the same. Although arguably the biggest effect is that the super rich people never sell their hedged shares and keep collecting them while the person with the 401k is forced out of their position (actually required to liquidate after a certain age) at a rate that diminishes their wealth faster than their dividends are issued.
Thanks!
Dividend is profit sharing. I’m investing in a company to grow it’s business and make profit and get a profit share or if the company value increased, sell my shares in higher price. Buying back is using the company profit to buying back the shares outside?? That’s a dirty game?
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