The Economist (July 18)
“There has always been an element of financial engineering about buy-backs. Can it really be good news if a firm feels it has nothing better to do with its money? An enthusiasm for buy-backs creates the sense that executives are more interested in short-term share-price performance than in the company’s long-term health.” According to some estimates, the number of available shares in U.S. stock markets has been reduced by approximately 6% since 2009 as a result of buy-backs, but the trend appears to be slowing.
Tags: Buy-backs, Enthusiasm, Executives, Financial engineering, Performance, Share price, Short term, U.S.
The Economist (February 15, 2014)
“Rule changes have made activism easier and therefore more commonplace. Nor is it restricted to America: shareholder activism is gaining in popularity around the world, in places such as Japan and continental Europe, where it was once unknown.” While there are instances where activists cause damage in pursuit of short-term gains, “recent academic studies suggest that, by and large, activists are good for companies. An analysis of around 2,000 interventions in America during 1994-2007 found not only that the share prices and operating performance of the firms involved improved over the five years after the intervention, but also that the improvement was greatest towards the end of the five-year period.”
Tags: Activists, Europe, Improvement, Japan, Performance, Popularity, Rules, Share prices, Shareholders, Short-term gains
Financial Times (January 6, 2014)
After spectacular performance in 2012, some fear the U.S. stock market is set for a correction. “For now, these worries are probably overstated. The current outlook has little in common with the rampant overconfidence that accompanied the great speculative excesses of the past. But there are reasons to believe that the preconditions for a bubble are in place.”
Tags: Bubble, Excess, Outlook, Overconfidence, Performance, Stock market, U.S., Worries
Wall Street Journal (December 26, 2013)
“The Nikkei’s strong performance this year hasn’t dented the enthusiasm of international fund managers.” In the first 11 months of 2012 foreign investors brought inflows of 830 billion yen into Japan’s stock market. In 2013, inflows from foreign investors soared to 14.8 trillion during the same period.
Tags: 2012, Enthusiasm, Foreign investors, Fund managers, International, Japan, Nikkei, Performance, Stock market
Euromoney (October Issue)
“Rates will rise as the Fed begins tapering. “Short-term interest rates will rise to 3% over the next two to three years, with the 10-year and 30-year rate likely to reach the 6% range,” according to Mike Niedermeyer of Wells Fargo Asset Management. He adds, “I think people will be surprised by the relative performance of equities over fixed income. Past decisions have forced a correlation between fixed income and equities but we could now have a return to negative correlation between fixed income and equities.”
Tags: Correlation, Equities, Fed, Fixed income, Interest rates, Niedermeyer, Performance, Tapering, Wells Fargo
Council on Foreign Relations (February Issue)
“Economists have long argued that taxing oil consumption would be the most efficient way to address U.S. vulnerability to overpriced and unreliable oil supplies. Yet energy taxes are a third rail in American politics.” This may change, however, amid increasing focus on narrowing the deficit. “It might be possible to reconsider oil taxes not only as an unwelcome burden, but as an alternative to something worse.” If done optimally, taxing oil consumption “can improve economic performance while reducing oil consumption.”
Tags: Consumption, Deficit, Economists, Oil tax, Performance, U.S.
