Quote Originally Posted by Dayuhan View Post
Are you prepared to base a conclusion purely on second hand accounts, or are you actually familiar enough with the inner workings of the company to decide what the best uses of its cash are? Surely you realize that analysts may have all kinds of agendas of their own, and that there's likely more than one side to that story... or are you willing to accept the story at face value because it supports your preconceived opinions about corporate governance?

In any event, if you're a shareholder and you disapprove of the Company's use of cash, you've the option to sell your shares. If you're not, why would you care?
Given the number of conclusions that are passed on around here based on less than secondhand accounts, then yes.

Obviously analysts may have their own agendas, but given the market performance of Zimmer and Pfizer they would appear to have a point, as Jamie Dimon's apology for similar behavior at JPMorgan would also appear to indicate. Can you give a solid explanation of why a firm would invest in share buybacks rather than long term research, especially given the short-term incentives for CEOs to indulge in the former rather than the latter?

As for why people besides shareholders should care - if you haven't noticed, this thread is about wealth inequality and responses to such in the U.S. A very large part of this in the U.S. is driven by CEO pay, which has become incredibly skewed in the past 25 years despite no corresponding growth in performance?

Once again, you take it for granted that the exercise of risk assessment is free of error. This is an insane proposition, for the same reasons in finance as it is on the battlefield.
Where are you getting that I expect risk assessment to be flawless?

I do expect, however, that if the gamblers are compensated at such high levels that risk assessment would be better performed than it was in 2008. However, I would settle for the gamblers to lose their government backstop and be broken down to the point where their poor risk assessment did not destroy the entire financial system. Then they can go about being imperfect and going bust or being profitable without hurting the real economy.

By making market for value delivered by services and goods and their expected performance in the future. There's value in ensuring that a bushel of wheat will trade at a certain price five months from now. This is what derivatives fundamentally secure.
Sure, that is what derivatives were meant to do, but if you believe that most derivatives trading is strictly hedging, then you must be one of those who believes that Vegas gambling exists because people really enjoy card games.

With $1 trillion in net assets, the Federal Reserve is one of the single largest actors in the financial markets, but that's three orders of magnitude smaller than notional value of the derivatives market.
More to the point, they are the backstop for much of the gambling that goes on, and the ultimate lender of last resort. They are the ones who will step in when the markets freeze. When they do not, as the ECB seems determined to show us, the whole game can come to an end.

I think trying to determine sustainability from two snapshots is insane.
You don't see that 2008 and 2011 are related? That the Latin American debt crises of the 1980s, the Asian financial crisis of 1997, the equity bubble collapse in 2000, the real estate bubble collapse in 2008, and the European fiscal crisis of 2011 form a pattern of repeated bubbles followed by increasingly severe collapses? That doesn't sound like instability to you?

Perhaps you are one of those who believes the 20th century was very stable - WWI and WWII were just eight years in 100, after all.