GETTING A LOT OF THAT ATTENTION
IN THE LAST YEAR AS COMPANIES
HAVE GOBBLED UP BY THEIR OWN
SHARES EXPLAIN EXACTLY HOW
STOCK BUYBACK WORKS.
>>ONE STOCK BUYBACK IS
BASICALLY IS AN EFFORT BY A
COMPANY TO SORT OF
SIMULTANEOUSLY REWARD ITS OWN
INVESTORS.
AND BILLY AS SHARE PRICE.
THIS IS SOMETHING YOU KNOW
COMPANIES HAVE DONE THIS FOR A
LONG TIME. SO IF YOU THINK OF
IT LIKE. THE COMPANY HAS 10,000
SHARES OUTSTANDING. EACH OF
THEM IS WORTH $2 AND THE
COMPANY IT SHOULD BE WORTH MORE
THAN THIS. WHAT THEY'LL DO IS
OFFER TO BUY THAT SAY. A 1000
OF THOSE SHARES AT A PRICE
YOU KNOW TO 50 INSTEAD OF THE
$2.
SO PEOPLE WILL TURN THEIR
SHARES AND THE COMPANY WILL BUY
THEM BACK AND THEN BECAUSE
THERE ARE FEWER SHARES OUT
THERE. THE PRICE GOES UP AND
SIDE BENEFIT TO THIS IS ONE WAY
WALL STREET MEASURES FINANCIAL
PERFORMANCE IS WHAT ARE YOUR
TOTAL EARNINGS. OUT TOO WHEN
THEY'RE DIVIDED BY YOUR
TOTAL NUMBER OF SHARES AND CEOS
WORK REALLY HARD TO CALL THIS
NUMBER THEY WANT TO SEE IT GROW
STEADILY FROM YEAR TO YEAR.
WELL IF YOU HAVE FEWER SHARES
OUTSTANDING. THE INNINGS PER
SHARE ARE GOING TO BE HIGHER.
EVEN IF TOTAL NET INCOME HASN'T
CHANGED. COMPANIES TYPICALLY
SPEND YOU
KNOW BILLIONS OF DOLLARS A YEAR
ON THIS EXCEPT I'M WITH THE
NOTABLE EXCEPTION OF WARREN
BUFFETT WHO HAS LONG MAINTAINED
THAT HE DIDN'T BELIEVE IN SHARE
BUYBACKS AS LONG AS THERE ARE
BETTER OPPORTUNITIES, YOU KNOW
BUSINESSES FOR HIM TO BUY.
>>YEAH GREAT EXPLANATION OF HOW
SHARE BUYBACKS WORKS LOOK LET'S
GO TO WHAT SENATOR SHERROD
BROWN AND OTHER DEMOCRATS HAVE
BEEN PROPOSING. SENATOR BROWN
SAYING WORKERS HAVE EQUITY IN
COMPANIES TO US BUT EQUITIES SO
WHAT ARE THE IMPLICATIONS FOR
WORKERS AND EMPLOYEES WHEN
THERE ARE SHARE BUYBACKS
AND WHAT EXACTLY IS HE ASKING
FOR HERE.
>>WELL ONE OF THE CRITICISMS OF
THE STOCK BUYBACK HAS BEEN THAT
IF YOU'RE SPENDING BILLIONS OF
DOLLARS TO BUY YOUR OWN SHARES
WHICH TYPICALLY REWARDS.
YOU KNOW WEALTHY INVESTORS AND
EXECUTIVES. THEN YOU'RE NOT
PUTTING THAT MONEY INTO NEW
PLANTS, YOU'RE NOT PUTTING THAT
MONEY INTO HIRING YOU'RE NOT
PUTTING IT INTO DEVELOPING NEW
PRODUCTS. AND WHEN WORKERS
COMPLAIN ABOUT STAGNANT WAGES.
THERE'S OFTEN A RATE THAT IS
DRAWN BETWEEN YOU KNOW WAGES
NOT RISING AND BILLIONS OF
DOLLARS GOING INTO THINGS LIKE
BUYBACKS SO THAT'S EXACTLY
WHERE SHERROD BROWN IS COMING
COMING FROM ON THIS AND HE SORT
OF MADE THIS PART OF HIS
UNIFICATION WITH THE
PRESIDENTIAL RUN EARLIER WHEN
HE TALKED ABOUT THE DIGNITY OF
WORK, THE DIGNITY OF WORKERS
MAKING SURE WORKERS HAVE A
CHANCE TO YOU KNOW AREN'T
ENOUGH MONEY TO LIVE A
COMFORTABLE LIFE DO A LITTLE
BIT BETTER THAN THEIR PARENTS
PUT THEIR KIDS THROUGH COLLEGE.
THAT'S WHERE HE'S COMING FROM
ON THAT. WHAT THIS WOULD MEAN
FOR WORKERS IS
SAY A COMPANY SPENDS
20 BILLION A YEAR. SHARE
BUYBACKS.
THEN A WORKER WOULD GET
SOMETHING LIKE $20,000 BASED ON
THIS YOU KNOW ONE DOLLAR PER
MILLION PROPOSAL AND NOT JUST
LIKE ONE WORKER WOULD GET THAT
$20,000 EVERY WORKER WOULD GET
THE $20,000 OF THAT COMPANY SO
FAR YOU KNOW PEOPLE WHO ARE
MAKING A LOWER LEVEL WAGES LIKE
MINIMUM WAGE OR EVEN. YOU KNOW
IT'S AROUND MIDDLE CLASS WAGE
THAT WOULD BE A
PRETTY BIG BUMP. YOU COULD YOU
KNOW. I SPEND TYPICALLY $20,000
ON A CAR FOR INSTANCE THAT BUMP
REPRESENTS NEW CAR FOR YOU.
IT MAY REPRESENT A YEAR OF
TUITION FOR A KID GOING TO
SCHOOL SO WOULD BE PRETTY
SIGNIFICANT. SO WHAT
HAS BEEN THE RESPONSE
>>MEMBERS OF CONGRESS FROM THE
GOP WOULD HAVE A SAD ABOUT THIS
BECAUSE THIS IS SOMETHING THAT
CONGRESS
MEMBERS HAVE NOT REALLY
SUPPORTED THERE ISN'T.
>>ARGUMENT AMONG THE BUSINESS
COMMUNITY THAT'S BEEN MADE OVER
AND OVER
THAT YOU KNOW STOCK BUYBACKS
ARE NOT A BAD THING THEY DON'T
REPRESENT BUSINESS IS NOT
INVESTING. THEY REPRESENT
BUSINESSES WHO SAY WELL IN OUR
OWN INDUSTRY. WE DON'T SEE A
HUGE
GROWTH OPPORTUNITY RIGHT NOW.
WE DON'T KNOW IF I'M A BANK I
DON'T SEE MYSELF BY ANOTHER
BANK AND MAKING A
LOT OF MONEY ON THAT ABOUT A
MANUFACTURING WILL SEE MYSELF
AND GETTING THE NEXT IPHONE AND
MAKING A TON OF MONEY SO WHAT
I'M GOING TO DO IS WE TURN SOME
OF THIS EXTRA PROFITS MILLION
INVESTORS, MAYBE THEY HAVE A
GREAT IDEA YOU KNOW MAYBE THEY
HAVE SOMETHING THAT'S GOING TO
BE THE
NEXT YOU KNOW ROBOT VACUUM
CLEANER AND SO PUTTING THIS
MONEY BACK TO THEM IS ACTUALLY
AN EFFECTIVE WAY OF MAKING SURE
IT GETS INVESTED IN A WAY THAT
WILL CONTINUE TO STAY SUSTAINED
GROWTH
NATIONWIDE. AND EVEN WORLDWIDE.
>>WHAT IS THE FEASIBILITY OF
THIS FOR LARGE
CORPORATIONS WHO HAVE MILLIONS
OF EMPLOYEES LIKE A WALMART
THAT HAS BETWEEN A MILLION AND
A HALF TO 2 MILLION EMPLOYEES
JUST IN THE US WOULD THEY BE
ABLE TO AFFORD SOMETHING LIKE
THIS.
>>YEAH THAT IS THE BIG IT
DEPENDS ON THE COMPANY GOT IN
THEIR FINANCIAL RESOURCES.
OBVIOUSLY.
IF YOU HAVE A LOT OF
FINANCIAL AND DEPENDING ON HOW
MUCH MONEY YOU SPEND ON BY
THAT YES YOU COULD AFFORD
SOMETHING LIKE THIS. MAYBE
THAT'S NOT THE WAY YOU CHOOSE
YOUR MONEY AND SENATOR BROWN'S
IDEA IS IT
THAT'S NOT THE WAY YOU CHOOSE
TO SPEND YOUR MONEY. WELL, THEN
YOU CAN INVEST IN SOMETHING