I imagine that innumerable newsletters are writing the equivalent of “the markets are being roiled by volatility.” (When things are being roiled, you know it’s bad.) With the immediate disclaimer that I do not have much in the way of useful market data, I do not see anything that the Fed should immediately care about.
Mike Norman explains downturn in terms of anticipated rate cuts and the consequent change in market conditions. No V shaped correction anticipated now.
What's the best time to buy hamburgers? When they are on sale.
Unfortunately the US stock market has influenced the rest of the world with its 'capital gains' mentality rather than concentrating on what firms are supposed to end up doing - generate a return to investors as a dividend while serving its customers and paying its suppliers.
No 'value' has been wiped from firms due to Mr Market. The value comes from the real activity of the business.
There is a reason Warren (Mosler, not Buffett) suggests that public listed firms should be open-ended rather than closed-ended operations. It stops all the bitcoin-esque speculation and ensures the firm gets the investment, not the speculators.
A *purely* open-ended firm allows on the one hand a watering down of investment, as well as opens up the doors to hostile takeover and a complete loss of investment. And yet, most firms are already open ended--the firm itself sells shares to the public, which raises capital for the business operations.
On the other side, this concept of dividends is simply imagination: firms pay what you are thinking is paid as dividends by share-repurchase by the company. Dividends belong with the free train tickets the Odakyu Railroad shareholders get, and the food gift catalogs and the Quo cards many companies offer as shareholder rewards.
Forbidding share repurchase by the company encourages hostile takeover, which may mean big gains for shareholders with new shares also in the combined company, but at basic, it implies opening up the case of easy complete loss of ones shares investment.
Well that depends if you've understood what Warren's proposals are, and how takeovers are managed currently with public companies. Eventually there is a requirement to offer for the existing shares. And that's where the squeeze happens, because that isn't price capped.
So you can go up to 30% of the company share issue by buying at fixed price, but no more without issuing a takeover bid of the existing shares.
The money goes to the company, not somebody else as in existing takeovers. Which means it can be distributed to existing shareholders. The more is paid. The more can be distributed. So if there is no new investment, all that happens is the existing shareholders just get more and more money as distributions. There is an incentive to avoid hoarding money because that just attracts takeover bids. So no more Apple cash piles.
How do you get 'big gains' for shareholders receiving the new shares when they have to issue shares at a fixed price also? So those receiving distributions from a conglomerate purchasing shares in a target can just buy shares in the conglomerate at their fixed price.
Dividends are what firms are there to provide. They are not there to provide casino chips in a huge gambling game.
Buying shares back gives company money to people who no longer want to be invested in the company. It's possibly the silliest idea anybody has ever come up with - particularly when those running firms are always convinced their share price is undervalued even when it clearly isn't. Which means firms *overpay* people who want to exit the company.
Open-ending all public firms largely eliminates price speculation and buybacks, and dramatically reduces share trading. It reduces cash hoarding and gets firms back to what they are supposed to be doing - investing in productive output.
Can we use 'knee-jerking' as synonym for 'roiling'?
I’ve only seen knee-jerk in association with reactions.
So in the end, do you feel a major downturn is upon us? Or are you saying this is much adieu about nothing?
A downturn could happen, but not because of what is happening to the yen, crypto, and equities.
Mike Norman explains downturn in terms of anticipated rate cuts and the consequent change in market conditions. No V shaped correction anticipated now.
What's the best time to buy hamburgers? When they are on sale.
Unfortunately the US stock market has influenced the rest of the world with its 'capital gains' mentality rather than concentrating on what firms are supposed to end up doing - generate a return to investors as a dividend while serving its customers and paying its suppliers.
No 'value' has been wiped from firms due to Mr Market. The value comes from the real activity of the business.
There is a reason Warren (Mosler, not Buffett) suggests that public listed firms should be open-ended rather than closed-ended operations. It stops all the bitcoin-esque speculation and ensures the firm gets the investment, not the speculators.
The move of Crypto & Equities into Gold demonstrates this capital gains mentality.
A *purely* open-ended firm allows on the one hand a watering down of investment, as well as opens up the doors to hostile takeover and a complete loss of investment. And yet, most firms are already open ended--the firm itself sells shares to the public, which raises capital for the business operations.
On the other side, this concept of dividends is simply imagination: firms pay what you are thinking is paid as dividends by share-repurchase by the company. Dividends belong with the free train tickets the Odakyu Railroad shareholders get, and the food gift catalogs and the Quo cards many companies offer as shareholder rewards.
Forbidding share repurchase by the company encourages hostile takeover, which may mean big gains for shareholders with new shares also in the combined company, but at basic, it implies opening up the case of easy complete loss of ones shares investment.
Well that depends if you've understood what Warren's proposals are, and how takeovers are managed currently with public companies. Eventually there is a requirement to offer for the existing shares. And that's where the squeeze happens, because that isn't price capped.
So you can go up to 30% of the company share issue by buying at fixed price, but no more without issuing a takeover bid of the existing shares.
The money goes to the company, not somebody else as in existing takeovers. Which means it can be distributed to existing shareholders. The more is paid. The more can be distributed. So if there is no new investment, all that happens is the existing shareholders just get more and more money as distributions. There is an incentive to avoid hoarding money because that just attracts takeover bids. So no more Apple cash piles.
How do you get 'big gains' for shareholders receiving the new shares when they have to issue shares at a fixed price also? So those receiving distributions from a conglomerate purchasing shares in a target can just buy shares in the conglomerate at their fixed price.
Dividends are what firms are there to provide. They are not there to provide casino chips in a huge gambling game.
Buying shares back gives company money to people who no longer want to be invested in the company. It's possibly the silliest idea anybody has ever come up with - particularly when those running firms are always convinced their share price is undervalued even when it clearly isn't. Which means firms *overpay* people who want to exit the company.
Open-ending all public firms largely eliminates price speculation and buybacks, and dramatically reduces share trading. It reduces cash hoarding and gets firms back to what they are supposed to be doing - investing in productive output.