Subject: Re: back to topic (was Re: a stocks and dividends question)
From: "Stephen J. Turnbull" <>
Date: Sat, 11 Jan 2003 03:32:23 +0900

>>>>> "Benjamin" == Benjamin J Tilly <" <>> writes:

    Benjamin> In other words in theory a stock buyback accomplishes
    Benjamin> _the exact same thing_ as a handing out a dividend.

Modulo the distortions due to transactions costs and taxes, and some
second order effects on risk structure, yes.

    Benjamin> Thus the theoretical difference for this common type of
    Benjamin> investor is entirely whether they experience periodic
    Benjamin> redistributions of wealth back to shareholders as
    Benjamin> capital gains later or as personal income now.  Since
    Benjamin> taxes are higher on personal income, many prefer to take
    Benjamin> this in the form of capital gains.

Sure.  Distortionary taxation distorts.

However, unlike lma, I wasn't (and am not) particularly interested in
that truism.  I was concerned with the "to distribute or not to
distribute" decision, not the "how to distribute" decision.

IOW, on FSB, we can leave that discussion up to the accountants and
lobbyists;[1] that's what they're good at.  The "growth stock" vs "blue
chip" question, on the other hand, cuts to the core of the new
business funding issue, and therefore is relevant (somewhat) to FSB.

[1]  I take Larry's post as an attempt to unleash the lobbyists.

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