Stock Market News: Stock Buybacks the Order of the Day
Today’s big new on the stock market (well, other than the fact that confidence is fading in the $700 billion bailout now that political wrangling is involved), is the announcement of some major stock buybacks. Stock Trading To Go reports on the thinking behind stock buybacks:
Companies with cash on hand are taking advantage of depressed stock prices in their own stocks by announcing big buy back programs. This is a strategic move that could give long term investors of these stocks something to cheer about.
The three main companies in question right now are:
What are stock buybacks?
Stock buybacks are programs in which companies buy their own stock back from shareholders. They use capital to purchase the stocks (often at a discount from higher prices) so that they can sell them at a later date for more money.
Stock buybacks can benefit some long term investors, since many of them originally bought stock at a much lower price. For instance, it you bought stock when it was $15 a share, but it went as high as $80 before this bear market brough it down to $35 a share, you are still making a profit. For those worried about additional losses, it can be calming to take advantage of stock buybacks.
In related news, MSFT also upped its dividend (paid quarterly) to 13 cents from 11 cents. This is helpful to those who use dividend stocks as a regular income stream.
Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.
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