Buyback is the name of the new trend sport for top managers of listed companies. Maintaining the course at your own expense by buying back your own share certificates. This formula for success is very simple: You take money from the company and shares from the market in order to calculate the future value. An effect-enhancing measure that we know in sport as autologous blood doping. It has been banned since 1988. Because it leads to distortion of competition, it is considered cheating and is punished with immediate exclusion from the competition.
Price doping also works on the stock exchange: HQ Trust calculated on behalf of the Handelsblatt that the buybacks are responsible for an average of a quarter of all price gains in Europe and the USA in the last ten years. Companies that are committed to sustainability are at the forefront of the field: Allianz, Adidas and Siemens. Who can say no to that when their own salary is based on the market value? So this movement has become a mass sport.
An end to the boom is not in sight. The corporations are spending an estimated 1000 billion dollars on their care program this year. A new record value, obviously the dose has to be steadily increased here as well. Intel has spent over 90 percent of its profits on shareholder goodwill through share buybacks and dividends over the past two decades. The thinned out capital base first cost the marketing budget and later market shares. It was of no use. The financial market is suffering from Alzheimer’s, yesterday’s plus is worth nothing today.
Adidas bought back billions of shares for years, only to fall in 2022 with a price loss of 49 percent in the penultimate performance place of the first stock exchange league. Apple spent an incredible 573 billion to buy back its own shares to end the year down 27 percent. A trillion dollar drop compared to Apple’s best days.
The key word on the stock market isn’t buyback, it’s imagination. And the companies have little to offer. We can’t find any worthwhile and promising investments, is the reason we often hear for share buybacks. She says: We don’t see any ideas, services, products, technology or partnerships anywhere in the group that are worth investing substantially in.
OpenAI: ChatGPT turned the world upside down
This is what acute lack of ideas and operational blindness sounds like. Imagination is at the beginning of the revenue chain. But even the Silicon Valley stars haven’t come up with anything earth-shattering after the iPhone, Google search and the Facebook button. Her inventive spirit has moved from product development to accounting. Making money with money is high arithmetic and less tedious than other investments.
In the meantime, OpenAI, which was founded in 2017, has turned the world upside down with ChatGPT and caused the headquarters of Google, Facebook, Microsoft and Co. to get excited. With massive staff cuts, they are now trying to fill their future fund again and buy in. Buybacks haven’t brought them any closer to the future.
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Nobody paid attention to the additional costs. The manic fixation on the stock market easily leads to inner resignation, loss of autonomy in the manufacture of future-critical components and noticeable losses in product quality. The future is getting further and further away.
What’s the alternative? Unimaginable, but true: Money alone can do nothing. Money only works when someone takes it in their hands, takes the mental leap and rolls up their sleeves. If there is nothing outside of your own four walls, it is doubly worth looking inside. The great unemployment prevents that the problems of the future can be solved with new forces. A focus on existing employees is necessary and a competitive advantage.
>> Read also: With this ETF you benefit from buybacks
The growth potential in your own company is great: employee satisfaction, digitization, customer loyalty, sick leave, revenue models, innovation pipeline, logistics chains. The list of possibilities is long. Investing billions in your own team, your own infrastructure and your own resilience would cause great amazement internally and unleash unimagined strength. On the day of the announcement. There’s even a term for it: healthy growth.
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