The best investors are not the ones who consistently select the biggest winners, but who manage risks and avoid suffering large losses. Here, we'll take a close look at the risks investors are up against.
CONSTRUCTION WITH A DIFFERENCE
Avada Construction Puts The Focus Back on Exceptional Service
The Dirty Dozen Investing Risks
#1 Inflation risk
It's known as Public Enemy #1 because it hurts all of us consumers.
As the prices of goods and services rise over time, our money buys less and less.
Great to hear from you. First, I believe that stock repurchases made with borrowed money should be prohibited. It is a desparate attempt to continue buying and propping up the stock. It's always said that dividends and share repurchases are ways that corporations "return cash to shareholders." Well, if the money has to be borrowed, it's not the corporation's cash and it sure as heck isn't being returned. It's being borrowed. What this does is saddle corporate America with trillions in additional debt that only makes them more vulnerable to failure come bad economic times. And when the SHTF, they'll come hat in hand begging for bailouts, to be rescued from their self-inflicted distress.
Regarding share repurchases with retained earnings and/or current profits, this is a lot less troublesome but still an acknowledgement that the corporations simply don't have attractive growth opportunities to invest in.
It used to be that a corporation repurchased its shares when it believed they were undervalued. It took Warren Buffett until 2011, when Berkshire's shares were trading around book value, to initiate a repurchase. That's how it's supposed to be done. But, again, because of the near-automatic appreciation in share price, corporations just keep on buying, regardless of price. From a CNN article "GE's buybacks were much worse in 2016. It spent $21.4 billion at an average price of $30.30..." The share price is about 1/3rd of that now, so they wasted 2/3rds of $21.4 billion What an extraordinary waste for a corporation on so many levels could not afford it.
3 - 1 month 1 week ago
Jillian Goldberg We literally spoke about this article today, and said how Mr. B would love this.
1 - 1 month 1 week ago
I sent this to Spencer today saying how I would like your take on it!!! Very random and kind of scary that it’s here now.
A great article that talks about corporations directing their activities toward the risk I discuss with my classes as Legislative Risk (in the article, Regulatory risk), not away from it (and other risks).