"There is a mind-boggling process at work today just as was the case
in the run-up to the 2008 stock market crash. It’s called the share
buy-back
Do you recall when, in the months before the Lehman
Brothers collapse and bankruptcy in 2008, I stated that the Company is
too smart to be buying $1.7 billion of their stock at a market cycle
top? I went on to say they were buying all the securities from family,
friends and best clients to provide all the funds those people would
need to buy shares at much lower prices after the next Bear.
In other words, I believed Lehman was ripping off the market. And they did.
Same
thing is happening today. Yesterday, Morgan Stanley (MS) announced a
major share buy-back plus a 50% increase in dividends. Their treasury is
now in the process of being raped.
Do you recall how shortly
before the 2008 market crash, Wall Street was advocating massive
dividend increases? Again, who was benefiting more than family, friends
and best clients?
Well, Wall Street is at it again.
Given
that this process is happening at cycle tops, when costs are enormous,
rather than at cycle bottoms, when market support is needed, I must
believe it is a plan. A plan to screw the rest of us."
Bill Cara
(thanks to Wile for this)