As I pointed out here, the odds for equity “investors” buying or holding stocks and high yield bonds at today’s sky-high valuations are poor to grim. But the prognosis is made even worse by the fact that many public corporations have used the reality of weak global sales to borrow and buy back their own over-valued shares in order to hit short-term earnings targets even while cannibalizing their longer term business model through non-productive capital allocations. Reuter’s Kevin Allison offers a rare, lucid assessment of these “idiotic” investing decisions so popular in present times:
“Corporate America is rediscovering the art of idiotic investing. U.S. companies bought back more of their own stock last year, despite toppy-looking share prices. It’s a familiar waste of cash driven by bosses who are running out of ideas, and dumb incentives that favour financial engineering. This time around, activist shareholders are adding to the pressure…” See the whole op-ed here: A senseless buyback spree
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