Investing Thread

[Skatastrophy]

SoCal and Wags: My feeling is that dividends are the better way to reward shareholders, but I appreciate the conversation.

The best way to reward shareholders is to invest in growth and innovation.

But companies that are out of ideas waste their money on repurchases and dividends instead. Better than having the cash sitting around depreciating.

[Plaque Lives Matter!]

The best way to reward shareholders is to invest in growth and innovation.

But companies that are out of ideas waste their money on repurchases and dividends instead. Better than having the cash sitting around depreciating.

Or in pharma to which I am intimately familiar, your R&D is M&A. (An exaggeration but very common)

[Plaque Lives Matter!]

I'm not sure about this statement, although in some ways I have the same question about buybacks as you do.  On the other hand, are not shareholders supposed to be rewarded for taking a risk on the performance of the company?  What better way to be rewarded than to share in the profits / earnings of the company through share buybacks and distribution of dividends? And what if AAPL believes it is investing the proper amount of capital into R&D for this moment in time?  They know much more than I do about how best to put the profits of the company to work.  Therefore, just like you, I have questions about the size of the AAPL buybacks, but I can't really fault them for their approach to date.  It has worked out really well for me and other shareholders, right?

Maybe Apple isn’t the greatest example for the phenomenon but long term growth and innovation is absolutely being  affected by stock market return pressure in the modern economy.

you can take the “it’s my money and I know how to spend it best” approach but in an increasingly volatile stock price environment the pressure on shorter term, higher and higher returns for shareholders is absolutely stifling innovation.

It’s absolutely negatively impacting tech such as meta, google, etc who are caught in the growth at all costs cycle at the expense of their product itself. Google took what they created that is basically a public utility at this point and have torpedoed it into the sh***er because of this perpetual growth model.

You simply cannot rely on small business innovation anymore with the economies of scale at play, but the pressure of returns at all costs is so high it’s sabotaging the products themselves

[Skatastrophy]

Or in pharma to which I am intimately familiar, your R&D is M&A. (An exaggeration but very common)

True for large old tech companies too, they're just too big and manager heavy to innovate properly anymore.

[JWags85]

Maybe Apple isn’t the greatest example for the phenomenon but long term growth and innovation is absolutely being  affected by stock market return pressure in the modern economy.

you can take the “it’s my money and I know how to spend it best” approach but in an increasingly volatile stock price environment the pressure on shorter term, higher and higher returns for shareholders is absolutely stifling innovation.

This leads to this...

True for large old tech companies too, they're just too big and manager heavy to innovate properly anymore.

IMO.

They don't have the time and leash to develop and run out innovation, so they need to acquire turnkey new tech/innovation so have immediate results.  If it doesn't work, they can justify it away later on, but they don't get dinged in the meantime for taking the time to develop and no immediate results.

I can remember the tide shift when an earnings beat was no longer enough if guidance and outlook wasn't strong enough.  And now its to the point that the latter well outweighs the actual earnings.

[MU82]

The best way to reward shareholders is to invest in growth and innovation.

But companies that are out of ideas waste their money on repurchases and dividends instead. Better than having the cash sitting around depreciating.

I mostly agree with this.

Doesn't change my preference for dividends over buybacks.