2011 Dow Jones Up

The Dow finished up for 2011 thanks in part to the makeup of the index. The stocks in the Down Jones Industrial Average contain only large U.S. companies. While financial companies make up a significant number of the stocks, their impact is limited because the Dow Jones Average is a price-weighted index. That means that higher priced stocks have more influence on the average than lower priced stocks.

Most financial stocks have very low share prices these days, and as a result, their performance doesn’t drag as heavily on the average. Bank of America was the worst performer in the Dow having lost 58.3 percent for the year.

The Dow Industrials finished up 5.5 percent for the year. That is three consecutive positive years for the Dow, although nobody is dancing in the streets over this year’s performance, where many components had flat or down years.

The top 5 Dow stocks for 2011 were McDonald’s (up 30.7%), IBM (up 25.3%), Pfizer (up 23.6%), Home Depot (up 19.9%) and Kraft Foods (up 18.6%).

2011 S&P 500 Down

For 2011, the S&P 500 Index finished down for the year, although it’s performance was essentially flat, down less than 0.1 percent for 2011.  Unlike the Dow average,t he SP500 index is weighted based upon each stock’s market capitalization. The dismal performance of the financial stocks included in the index have large market caps and weighed heavier, pulling the index down.

For example, IBM’s high share price (around $185 per share) means that it’s positive returns for the year count a lot toward the up side for the Dow versus Bank of America’s terrible performance being only a small impact thanks to its $5 a share price. On the S&P 500 Index, however, Bank of America’s $56 billion market cap gives it much more pull.

NASDAQ 2011 Performance Down

The Nasdaq Composite Index was also down for 2011. It finished the year down about 1.8 percent.

Other Stock Markets in 2011

International markets didn’t do as well as the U.S. In Europe, the growing Euro crisis has engulfed not only Greece and Ireland, but Italy and Spain as well. Britain’s main index, the FTSE dropped 5.6 percent for the year and the main German index, the DAX, was down approximately 15. That is its first down year since 2008.

Elsewhere, the Asian index, the Nikkei was down 17 percent.

For 2011 Gold was up 10.2 percent for the year (down from this summer’s +33 percent peak). Oil was up 8.2 percent for the year.

2011 Market Recap

So, what does the market performance for 2011 mean for investors?

Almost nothing.

The small gains and losses for the year hide the extreme volatility that took place during the year through bone-headed gridlock in Washington, particularly over raising the debt-ceiling, and the building financial crisis in Europe.

Overall, regular investors would be wise to take very little stock of how the markets overall performed during 2011. Instead, investors should focus on finding good companies with strong management since those are the only ones poised to benefit from what looks to be weak economic growth during 2012.

For American’s regular lives, the markets offer no real solution or problem to the ongoing economic issues. Recent economic data suggests that the economy might FINALLY be turning a corner, assuming the current my-party-is-more-important-than-the-country mentality in Washington can either be overcome, or sidelined by a nation that has grown largely disgusted with everything the comes out of the nation’s capital.

If jobs continue to get created and Congress doesn’t break the fragile economy, 2012 might see better investment performance, and more importantly, set the stage for real economic growth and investment performance in 2013.

Happy New Year, Everybody!

Related posts:

1. 2011 Stock Market Update Q3
2. Stock Market 4th Quarter Turn Around

Stock Market 2011 Results originally published at Finance Gourmet

Unfortunately, most people who invest in the S&P 500 Index do so in the same way the index is calculated, capitalization-weighted. That means that you buy more of the bigger companies and less of the smaller ones. There are some index funds and ETFs that allow you to invest in the S&P 500 Equal Weighted Index.

There are actually numerous ways in which this was not a lost decade for investors, most importantly, if you KEPT INVESTING, which is what both savvy and not-so savvy investors did when they did not turn off their 401k contributions through this turbulent decade. Those investors could have much more money today than the beginning of the decade and are primed for a much bigger recovery when the U.S. economy finally pulls out of its doldrums and moves ahead.

More on this later…

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S&P 500 Equal Weight Index Not a Lost Decade originally published at Finance Gourmet

Of course, there is a long way to go until the end of the year and pressing economic matters like the debt crisis in Europe, the joint budget cutting committee and an unemployment rate that won’t go down are still to be resolved.

For the time being, non-day trading investors should remember that short-term movements in the stock market are notoriously difficult to predict.

End of Year Portfolio Rebalancing

Many experts recommend rebalancing your long-term portfolios like retirement accounts (IRAs, 401k, and other retirement plans) once a year. Traditionally, many people do it near the end of the year. If you haven’t rebalanced your portfolio since last year, it’s a good time to start thinking about doing it soon.

Related posts:

1. 2011 Stock Market Update Q3
2. Stock Market 2011 Results

Stock Market 4th Quarter Turn Around originally published at Finance Gourmet

The stock market took a huge dive starting July 21st and has never pulled itself back up. For those of you looking for the culprit, let me help you out. The debt ceiling deal was reached at the end of July, which means the 21st was pretty much the height of the shenanigans. The markets have had no truly good news since to pull themselves back up by.

Outlook for 2011 4th Quarter Stock Market

Don’t expect the news cycle to save the stock market during the fourth quarter of 2011. In the 4th quarter, we’ll see increasingly competitive rhetoric building in the Republican Presidential primary, the product of the debt ceiling committee, which most are projecting will fail, and the start of the holiday shopping season, which will likely get spun in the mainstream media as a disaster early on, no matter how it ends up going in the end. Furthermore, the Fed is out of the picture having approved its latest financial stability plan, “the twist.” And, finally, the European debt crisis has no indication that there will be any sort of grand resolution by year end.

In other words, there is not likely to be any sort of overall good news politically, economically or anecdotally. In fact, most of the news around the stock market will likely be bad news, not good news.

So, what will push the stock market up in 4th quarter of 2011?

The best answer is probably nothing. The markets may move in an upward trend over the last three months of the year if investors starting looking ahead to 2012 and liking what they see. (Remember, the stock market is a leading indicator.)

The other possible savior may come from earnings reports. With the third quarter over, companies will be reporting their 3rd quarter earnings in the coming months. If a sufficient number of companies are able to report good enough earnings, coupled with positive outlooks for next year, the markets could see a significant boost for the end of 2011. In other words, a Santa Claus rally is not out of the question. However, if this market is going to go up for the rest of 2011, it’s going to have to do it on its own.

Stock Market Outlook for 2012

How does the stock market look for 2012? That question isn’t as hard to answer as it may seem.

The news cycle has already punished the stock market, and it will continue to do so for the foreseeable future. The eventual Republican Presidential nominee will do their best to paint the economy as an unmitigated disaster and the short-term impact of billions of dollars of government spending cuts may just make that a self-fulfilling prophecy. (Don’t forget, tax-cuts and lower regulation are not short-term economic boosters, those things take time to work their way into the economy. The impact of government spending, or lack thereof, has an immediate impact, even if the full repercussions aren’t felt for many years.)

In other words, people aren’t likely to be in a big investing mood. On the other hand, most trades on Wall Street are computers talking to other computers and they might start to like what they see.

The U.S economy has been mired in a recession for longer than is typical. The boom (some say bubble) coming out of Silicon Valley may well be the last spark that is needed to push the economy forward and most economists do expect some growth next year, no matter how weak.

In other words, 2012 or 2013 is the start of the next bull market. Long-term investors may as well get in now, or wait until after the stink from the Congressional Joint Select Committee failure clears the air. Either way, buying low means buying when things sound bad but the future looks like the only way is up.

If your investing horizon is longer than the next 12 months, that time is now.

Disclaimer: This is not an offer to buy or sell securities. This is not specific investment advice and should not be relied upon for you investing decisions. Consult a financial professional for financial advice specific to your situation. Consult a tax professional for specific tax advice.

Related posts:

1. January 2009 Stock Market Update
2. Stock Market 2011 Results

2011 Stock Market Update Q3 originally published at Finance Gourmet

I’ve long since stopped trying to add anything to these conversations because Apple stock fanboys are no different than Apple computer fan boys. Everything Apple does is right and great and anyone who thinks differently is a brainwashed slave to the system.

The truth is that Apple stock has done phenomenally well and that it is not now, nor has it ever been a “bad” investment. However, as with all things related to personal finance, there is no such thing as a universally “good” investment. What makes an investment good or bad is how well it is suited to your specific situation and goals.

What Happens To Apple Stock Now That Jobs Has Resigned

The one thought that I had every time someone told me about their Apple investment plans was, “What happens when Steve Jobs leaves?” Much like those who invest in Berkshire Hathaway stock, people who invest in Apple are in some ways investing in Steve Jobs and then, his successor.

As analysts have pointed out, Apple’s product line is likely already very solid for the next few years. It takes time to design and bring a product to market, and many of Apple’s next things are already well down that timeline. However, the one thing that Steve Jobs gives Apple, and its stock, is a Get Out of Jail Free card. If Apple’s next iPhone or iPad dissapoints in any way, it will quickly be excused because everything else the company makes is awesome and because everyone knows that Steve Jobs will make the next one even better.

All of which brings us to the question. How much, if any, of all this carries over to the new CEO? If the iPhone 5 is amazing but the iPhone 6 is even minimally disappointing, does the panic begin? Does the stock crater? Do investors remember that this is still Steve Job’s pipeline for the next few years?

Just like at most times during the past few years, there is a lot of upside in Apple stock, but the downside could be very ugly.

People I discuss these things with point out at how well Apple stock has done over the past decade, and they are not wrong, but that stock price depended at every step of the way on things going as well as they did. A similar stock chart for the future depends on the same level of execution.

Ironically, the answer we get tomorrow when the markets open will only be half an answer. Jobs is staying on as Chairman of the Board, regardless of how little or how much that role involves Jobs in Apple’s products in the future, investors are likely to assume that there will be plenty of Jobs magic in everything Apple makes and that will temper any stock movements. Still, Thursday should be interesting for whatever does or does not happen.

Update: No significant sell-off on new of Steve Jobs stepping down. We’ll see how long the, it’s just as good, feeling lasts. Either way, it seems Apple shareholders are comfortable with things as they are.

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Jobs Resigns Apple’s Stock Price Falls? originally published at Finance Gourmet

Be that as it may, if you want an official government agency explanation of terms like Market Orders, Limit Orders, Stop Orders, and Stop-Limit Orders, here is a nice, short, easy to read one for you.

By the way, there are numerous investor education pieces available at the SEC website. Just search your topic and add site:sec.gov to the end of your search to limit results to those that are on the official U.S. Securities and Exchange Commission website.

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1. Personal Finance Basics
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Trading Basics from the SEC originally published at Finance Gourmet

One of the major concerns we had about Apple company stock as an investment was that investors seem to be pricing perfection into the stock price. For a company that has delivered nothing but in the past, that isn’t necessarily a bad thing. However, a single misstep could send Apple’s stock plunging if investors decide that flawless execution by the company isn’t a given.

The other major concern was how closely the company’s fortunes are tied to it’s CEO Steve Jobs. That point was driven home today with a sledgehammer as Apple released a statement saying that Steve Jobs has been granted a "medical leave of absence." The statement goes on to say that Jobs will continue in his roll as CEO of the company and be involved in "major strategic decisions for the company."

Jobs’ previous medical absence seemed to cause no lasting harm to the company and it is possible that this one will pass with the same effect. However, there is also the possibility that Jobs may not return, may take too long to return, or may not be able to return at the same level of involvement.

It is entirely possible that Apple will be just as successful without Jobs when he does leave the company completely. However, when your stock price contains nothing but sunshine and lollipops, the slightest gray clouds can be a problem. The industry icon has been fighting cancer and there are never any guarantees.

Check out the Capital One Rewards Catalog update.

Since the U.S. markets are closed in observance of the holiday, there is no stock official stock price movement in reaction to the news, yet. In Germany on the Frankfurt market, Apple share prices had declined 7 percent.

Apple is set to report earnings on Tuesday, and the company may be hoping that the good news everyone is expecting will be reported might blunt the impact of the news. However, stock prices are a leading indicator and based upon how well the company is expected to execute in the future.

Apple is doing so well right now that if they made me CEO, it would do fine for another year or so just from inertia, but investors and analysts looking toward 2012 and what happens after anticipated products like the iPhone 5 and iPad 2 are probably looking at their models this morning with a critical eye.

Apple may be a great investment for years to come, but today’s news is an important reminder for investors in any company that things can and do change unexpectedly. None of the technical analysis, research, or in-depth examinations of SEC filings could have predicted this morning’s events.

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Apple Stock Price Tied to Steve Jobs originally published at Finance Gourmet

Whether that versions of events is true or not is open to debate. However, what has been missing so far from the banking crisis scenario is that numerous investors, very sophisticated, institutional investors, were also "duped" by Wall Street titans and those too-big to fail banks. Those investors were buying AAA-rated bonds from reputable investment firms and banks. They were not buying risky, high-yield bond investments, or so they thought.

An article over at MSNBC underlines those circumstances and suggests that the next phase of the mortgage crisis debacle may just now be getting underway, thanks in part to the complexities and speed of the U.S. legal system.

Banks Sued Over Mortgages Used For Bonds

Giants of the bond market’s investing world such as PIMCO Investment Management, and Blackrock Financial Management, two of the biggest fixed-income mutual fund managers in the world, as well as Charles Schwab, and others, have begun suing banks like Citigroup over investments they bought during the run up to the real estate market crashing and triggering the so-called Great Recession.

These investors are suing on several grounds, but their argument centers around the concept that the investments they bought, did not match the investments they were sold. The documents attached to the bonds that were purchases promised certain things like underwriting standards that would be followed. The investors are claiming that those standards were not met, and that the companies selling the investments were aware of it.

The difference between the fight between the banking giants and people stuck in "bad" mortgages is two-fold. First, there is some blame for those who got into mortgages that are now problematic. Whether they fully understood what they were getting into, or if they never got all the facts, they did seek out, and obtain the mortgage, and helped along the process of getting approved. Second, the power of individual homeowners against financial titans is limited.

But, the investors who got stuck holding the bag when they bought what they were supposed to be buying, low-risk, highly-rated, fully underwritten, mortgage backed bonds, don’t have the same liability. The only argument the banks have is that all investments have some risk and that is not their fault. That only holds water if the risk they warranted in the documents that created the bonds was factual. More importantly, these big-name investors are equally matched with the banking titans they are aiming at, with just as much time, money, and resources to dedicate to attorneys, lawsuits, and court costs.

Bank Stocks Outlook

What does this all mean for investments in banking stocks and other financials in 2011?

That depends on how these cases unfold. If they get past the initial stages — a good bet — then companies will have to start setting aside or reporting large amounts of money as possible losses if they end up losing what are sure to be giant lawsuits. If things go well for the plaintiffs in the first wave, expect a bigger bolder, second wave to show up in mid to late 2011.

In other words, the outlook for the financial sector in 2011 might be worse than it seems as the end of 2010 approaches. Stay on your toes and be ready to shed banking investments if things take an unfavorable turn in the courtroom.

Related posts:

1. Are TARP Repaying Banks Good Investments
2. Economy Outlook 2010 2nd Half – June Job Losses

2011 Outlook for Banks and Mortgage Companies originally published at Finance Gourmet

People are always asking me if I think certain stocks are a good investment. There is a flaw in the question, but we’ll get to that in a minute. Right now, let’s get right to the real question people are always asking me these days.

Is Apple Stock a good investment?

What people mean when they ask me that is not whether or not Apple is a good investment, but whether or not I think Apple stock will go up a lot … soon … really soon. They also want to know whether or not I think Apple stock will go down, but that is not why they ask the question. They want to buy Apple stock because it sounds like a smart investment, or because it feels like a smart investment.

Of course, none of this has anything to do with an in-depth analysis of the company’s stock and it’s prospects for future growth and earnings. It’s all about buzz. They heard about the iPhone and it’s a big hit! They heard about the iPad and it’s a big hit! They heard about the NEW iPhone, and it’s a big hit! Now, they hear that Apple’s earnings are higher than Microsoft’s earnings and a new iPhone is coming to Verizon, and…

Can I PLEASE buy Apple Stock and become a multi-millionaire?

Is Apple A Buy?

Whether or not Apple stock is a good investment FOR YOU has a lot more to do with you than it does with Apple.

Where is this money to buy AAPL coming from?

What are you planning on using this money for?

When are you planning on needing the money?

What is the purpose of investing in Apple stock in your own portfolio?

– I get a lot of blank stares.

I know you want to go buy some shares of Apple right away before "it’s too late," so I’ll get right to the point.

First, investing in stocks is usually a bad idea for money that you need or plan on using sometime in the near future. Even Apple stock goes down. Sometimes it goes down because of the company, and sometimes it goes down for reasons completely unrelated to Apple and its iPhones and iPads.

• Do you remember all of the times in the last year where the company reported that iPhone sales or iPad sales or iPod sales were down?
• Do you remember all of the times during the last year when analysts were negative on Apple’s financials and worried about the strength of their sales?
• Do you remember all of those times in the past year when the press and media were running those negative stories about Apple and all of those negative reports about iPads, iPhones, and iPods?

If you pay a lot of attention and have a really good memory, you might recall the whole Antenna Gate thing where there were ongoing reports of problems with the iPhone losing signal strength when people held it with their hands.

If you can remember anything else, you might be confusing another company, because other than the problem with the iPhone antenna there has been nothing but good news about Apple from the company, from technology analysts, and from the news media.

At an investor level, there hasn’t been a single downgrade of Apple since November 2009, and that was from Strong Buy to Buy. Not exactly a damning indictment.

In other words, there has been nothing but good new from Apple for the past year.

The point?

In the short-term, there is no way of knowing how the market will react to any bad news from Apple if there is any. It is also important to see that Apple doing great things is not new news. There are already a lot of investors in the stock expecting great things, not from the iPad, or the iPhone 4, those great results are already very much reflected in the price of the stock. The investors in Apple today are putting their money on great things happening with the iPad 2 and the iPhone 5. If you believe that too, then Apple is a good investment for you over a 2-year or longer period.

If you are looking at anything shorter than that, consider this 52-week chart of Apple’s stock price. Notice that there are plenty of times where buying Apple stock would have been a loss if you had to sell too soon. There’s a three month period beginning with the peak in June where your investment would have been nothing more than a capital loss deduction. If you bought in May it would have been five months before you made more than pennies on your investment. Even Apple stock is a tricky buy for the short-term.

Before you buy, fire up any one of the free stock charts online and take a look at how the stock price moves over weeks, months, and years so there are no surprises.

In other words, if you have money in a brokerage account sitting in cash, or if you have some other stocks you aren’t feeling as strong about, you could do a lot worse than AAPL. But, if you’re taking the $1,000 cushion out of your savings account to grab a handful of shares, don’t bother.

Remember if you invested $1,000 in Apple — or any other stock — and it went up 25 percent, you would make a whopping $250. That’s a good start for money that you have no plans for other than investing. It’s not worth the risk if you need that money to pay for Spring tuition this January.

Finally, before you get too excited about the guaranteed profit from owning Apple stock that you might be imagining, ask yourself one very hard question. Although it isn’t nice to think about, nice isn’t how investors profit. Steve Jobs is getting older and has had some major health issues. Deliberately or not, he has been positioned as more than just the CEO of Apple. If he were to die or need to step down from his position at Apple, what do you expect to happen to the stock price?

It’s a real risk, and one that should be considered by any serious investor.

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Apple Stock Good Investment or Passing Fad originally published at Finance Gourmet

The idea of a stock buyback is that the company figures that its stock is undervalued on the stock market. By buying shares of stock at those low prices, the corporation is increasing shareholder value by making a good investment in itself. Theoretically, those shares repurchased by the company at a low price can be used to pay out earned stock options, for example, at a lower cost.

But, IBM — along with many other companies — has perverted the concept of a share repurchase or stock buyback.

IBM Stock is currently trading near an all-time high stock price. While, it is possible that even at that price per share the company believes its shares are undervalued, that is not what is really going on here.

IBM Stock Buybacks Share Repurchase Run Amok

IBM is not a “new” tech company like Microsoft, Google, Amazon, or Apple where shareholders are accustomed to the company piling up hoards of cash that it has no intention of ever returning to shareholders. Rather, IBM shareholders expect to be paid dividends. This should be true of all shareholders, but the markets have run a long way from reality these days.

For 2009, the company announced that it “returned $10.3 billion to shareholders…”

On the surface, that sounds pretty good. However, what really happened is that the company actually paid $2.9 billion directly to shareholders in the form of dividends and then indirectly returned $7.4 billion to shareholders in the form of IBM stock repurchases.

In other words, that $7.4 billion that was supposedly “returned to shareholders” came not as cash, but as the possible intangible benefits of less shares outstanding.

In certain circumstances the above scenario could be considered a smart fiscal move, or at the very least, a legitimate financial strategy on which reasonable people could disagree.

The problem is that this is not a one-time thing, but rather an ongoing scheme by the IBM Board of Directors and IBM executives who seem to care a lot more about triggering their bonuses than they do about the company shareholders they are supposed to be working for.

IBM Dividends Versus Stock Buy-Backs and Share Repurchases

IBM has racked up a history of lopsided share repurchases versus dividends. While the company loves to tout how much value it returns to shareholders, looking behind the green curtain reveals some troubling trends.

“IBM’s higher value, higher margin business strategy has enabled the return of $91 billion since 2003 to our shareholders through share repurchases and dividends,” said Samuel J. Palmisano, IBM chairman, president and CEO.

Notice how Mr. Palmisano is very careful to include share repurchases in that number, because otherwise, that statement would be: “IBM’s business strategy has enabled the return of $7.6 billion of shareholder value through dividends.” Sounds far less impressive.

Take a look at just the last three years of IBM’s financials and you’ll see the comical lopsidedness of share repurchases compared to dividends.

• 2009 – Dividends: $2.9 billion — Share Repurchases: $7.4 billion
• 2008 – Dividends: $2.6 billion — Share Repurchases: $10.6 billion
• 2007 – Dividends: $2.1 billion — Share Repurchases: $18.8 billion

From 2007 to 2009, IBM spent $36.8 billion buying its own stock. During the same period, the company paid CASH DIVIDENDS to shareholders totaling just $7.6 billion. In three years, the company spent nearly five times more money buying stock than paying dividends. What did shareholders get for all of that stock buying spending spree?

The weighted-average number of diluted common shares outstanding in 2006 (before this 3-year stock repurchase period) was 1.55 billion shares. After spending $36.8 billion, the average number of shares at the end of 2009 was 1.34 billion.

Add it all up, and IBM spent $36.8 billion to reduce the number shares by 210 million, which is the overall net equivalent of paying $175.24 per share of IBM stock.

Don’t forget that IBM stock never traded higher than $130 per share during that time.

It’s not that the there was no value in all of the IBM stock buybacks. Fewer shares means lower supply and a higher-stock price. It also improves certain financial numbers like P/E ratios and the like. However, one has to wonder how much value can be assigned to those things versus the dollar amounts paid for them, especially compared to the intrinsic value of cash payments.

If IBM had forgone repurchasing stock in 2009 and instead paid that $7.4 billion out as dividends, then shareholders would have been paid an additional $5.52 per share for the year, and there would be 1.34 billion shares outstanding instead of 1.31 billion. How much difference in the P/E ratio is made by having 0.03 billion fewer shares?

Which do you think shareholders would rather have?

Why IBM Hurts Shareholders Buying Back Stock Instead of Paying Dividends

Why would IBM pursue a strategy of using much more money to buy stock than to pay dividends when “returning shareholder value?”

The non-cynical answer is that is difficult for any company to cut its dividend. Wall Street likes to punish companies that cut their dividends. This is not an intentional desire so much as a function of stockholders requiring a dividend of a certain size to make an investment in the company’s stock. Thus, when IBM, or any company, cuts that dividend payment, those shareholders sell in order to maintain their desired income.

Increasing the dividend on IBM stock from $0.65 a share to even $1.00, for example, locks the company into paying $1.00 per share dividends regardless of future natural variations in the company’s earnings. Otherwise, IBM becomes one of those stocks with an “unreliable” dividend.

In other words, shareholders would rather get a consistent, but low, payment rather than a high payment that might need to be reduced in the future. Using money to buyback stock is not so obvious, and the company can give many reasons for cutting back on such an expenditure without the stigma of cutting the dividend.

The cynical answer is that the bonuses and payouts for IBM executives and IBM’s Board of Directors are based entirely on the price of the stock. Keeping the price per share high benefits IBM execs much more than paying a high dividend to shareholders does. Ironically, the primary use of all these repurchases shares is to give them back in the form of stock grants and stock options to the same directors and executives setting this financial strategy.

Either way, it seems that shareholders, and the financial media, seem content to swallow IBM’s rosy claims about what a wonderful job it does returning shareholder value without questioning whether even a small percentage of money used to repurchase shares would be better spent paying an increased dividend.

While such a financial strategy’s wisdom could be debated, it seems that there will be no debate, because no one will bother asking the question. Just because MBA courses teach that share buybacks are the same as paying dividends from a balance sheet accounting point of view, does not mean that they are the same thing in the real world.

Image courtesy of Yahoo.com stock charts

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Are Share Buybacks Really Good For Shareholders? originally published at Finance Gourmet