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Can businesses with a large cash flow make more money in the stock market..?

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kentuck Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-04-11 03:10 PM
Original message
Can businesses with a large cash flow make more money in the stock market..?
..than they can in the competitive market place by hiring more employees?

I think a lot of businesses have that very strategy. Why hire more workers when they can make more money by investing in the stock market or shipping our jobs overseas?

I think this "stock market" strategy is a big cause of our present unemployment problem and the lack of investment in our country. With the advent of 401K's, different companies see the stock market as a better place to make profits than simply expanding their businesses. Their goal has now graduated to the point where they want to buy up other companies, mainly competition, and to keep their wages as low as possible. This will cause long-term unemployment for millions more of our workers. But their job is not to worry about the unemployed but rather the bottom line for their stockholders.

I think this is the new reality in the workforce of America. The stock market has infected the capitalist system with a dangerous virus. There are no easy fixes. The stock market will either crash or be subject to strict regulations and fees in order to stop this very unusual bubble. And it is a type of investment bubble. And as we knows, sooner or later, all bubbles burst.
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Yupster Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-04-11 03:18 PM
Response to Original message
1. Since the stockmarket (S+P 500)
has made no money for the last 10 years, that doesn't seem to be a very good strategy.
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kentuck Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-04-11 03:21 PM
Response to Reply #1
2. Even if the stock market stays the same...
Some people make money and some lose money. When it doesn't grow, more people lose money and less people make money. It has become a racket for some "investors".
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banned from Kos Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-04-11 03:29 PM
Response to Original message
3. the four most common uses of excess cash for corporations
1- buy back their own stock
2- increase their own dividend
3- buy another company
4- expand organically

Apple is #4 all the way. Google is mainly a #4 with some #3.

This is really a fascinating topic but is little changed since the 2008 crisis.
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kentuck Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-04-11 03:35 PM
Response to Reply #3
4. How much of their expansion is overseas?
With Apple, I think it is near 100% overseas?

And how much of their profit comes from American consumers, I wonder?
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banned from Kos Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-04-11 03:47 PM
Response to Reply #4
5. A lot. Tech is all about standards. Those two + Intel and Microsoft
are huge winners everywhere. Oracle is another.

Corporate taxation is shaping up to be a huge issue with the Teabagger set crazily wanting to eliminate it - which raises all sorts of questions they are too stupid to consider - like Sub-corp (S) taxation.
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kentuck Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-04-11 03:54 PM
Response to Reply #5
6. But do not most of them get taxed overseas?
and then they write off their taxes in America because of foreign exemption?
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FarCenter Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-04-11 04:48 PM
Response to Reply #6
7. Google, for example, parks it profits in Ireland, which has very low corporate taxes
Other companies who are in goods, rather than services, can price their imports so that the US part of the company does not make much money and most of the profits accrue to an overseas sub in a low tax jusrisdiction.

In other cases, it is simply true that the subsidiary in a growing dynamic economy such as Brazil or China is indeed far more profitable than the stagnant US part.

Many of the S&P 500 have more assets, revenue, and employees outside the US than inside.
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Odin2005 Donating Member (1000+ posts) Send PM | Profile | Ignore Sun Sep-04-11 05:07 PM
Response to Original message
8. This is exactly why we need higher Capital Gains taxes
When it is more profitable to invest in the Wall Street Casino that it is to invest in the real economy then catastrophe is inevitable.
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