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Exchange-doping on wall street: commercial pumps shares artificially

Luca Maestri doesn't look like a man who had Doping is necessary. The chief financial officer of the technology company Apple with the gray hair is often in a shirt, under which a small abdominal approach spans. To have his bicep or triceps artificially inflated? That would accuse Maestri, nobody.

And yet investment experts say that Maestri had, at least, with financial doping methods are well-acquainted. Because no company has bought in the past few years for so much money to own shares as Apple and therefore the prices inflated in a magical way.

Many companies from A as in Apple, B as in Bank of America to C, such as Cisco currently have a large appetite, of all things, on their own shares. Figures from the investment Bank Goldman Sachs show frightening: The largest driver of the price rally this year, are not pension funds, investment companies or private people. No, the biggest start-up factor for the U.S. exchanges , the companies themselves have blossomed. In the past year, the US-companies in the share index S&P 500 have bought for 806 billion dollars of its own shares – and your shopping tour in this year continued.

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This is particularly interesting: to has Because the start of the week, the Dow Jones surpassed the mark of 28’000 points. However, in the coming year, warn bankers, could put many companies on withdrawal. And US politicians say the share of purchases on the struggle.

the course doping

does the U.S. stock market on shaky Foundation? Who wants to the estimate, is necessary to understand how the intrinsic rate of doping of the companies acts. When companies buy back their own shares, then the number of your shares will be reduced on the stock exchange. The range of stock is so scarce, what drives the prices.

In a second step, the share buybacks, however, for a further rate effect, because, after share repurchases of the securities act automatically prettier. If fewer shares are in circulation, then the entire profit of a company distributed now, finally, on fewer shares.

The result: Although the entire profit has remained the bottom line is the same, the earnings per share higher. And it is precisely on this measure, many shares look analysts, especially in the United States. The companies hold for investors, a kind of optical illusion. "This is at the end of the course of cosmetics," says equity market strategist Philip Immenkötter from the Research Institute of the German Fund house, Flossbach von Storch.

the share repurchases to the most important pillar of the shares could be recovery, as so much of the US to do markets at the moment with only one man: President Donald Trump has provided the company with its tax reform in 2017, a lot of money, finally, the company decreased taxes suddenly from 35 to 21 percent.

The result: Suddenly, many companies were sitting on a mountain of money and a luxury had issue. What should you do with the billion? "A tax-inspired record-buying tour," says a capital market strategist, Howard silver leaf of S&P Dow Jones Indices, is called a purchases return.

Democrats say will put a stop to

critics: Instead of investing the money in smart people, higher wages, or new machines, have bought back many of the companies in their own shares. In the United States bettors the influence of Democrats for some time against the practice of corporations, particularly Chuck Schumer and Bernie Sanders. So, the democratic leader in the U.S. Senate, and the face of the Left among the Democrats. Their idea: If companies want to buy back its own shares, then you will need to in the same breath also their employees a higher wage pay.

Also an expert Immenkötter criticized the buyback boom: "I hard for me to imagine that companies in times of digitalisation know how they could use the money to better use."

proponents of the practice argue, however, In years of particularly high share buybacks could not prove that companies have less invested in machinery or factories. And maybe in the end it is even better when companies buy their own shares back instead of the money buying other companies to take with a sensitive Acquisitions.

Without the price of cosmetics, it will be rated dangerous

no Matter how to the rate of doping economically – for the US stock exchanges it is an essential factor. In the coming year, the return is expected to decline purchases forecasts from Goldman Sachs, according to five percent, many companies will hold your money together.

What happens if the buyer lack, can already be observed today. In the weeks before companies introduce pay your quarter, you must abandon the course it is cosmetic. The result: The rate of wild be rashes. The repurchases are, therefore, not only the course of doping – but a sedative pill at the same time.

Created: 20.11.2019, 13:53 PM

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