330 days

I am planning on retiring. And this is my diary to countdown the days.

330 days until.

I can’t wait to be a writer. I have taken time off to be one at various times in my life and at those times, I thought this was my crack at it, my only crack, and by the time it was over, I had to be making money, or would have failed, which of course I did. What I learned from these experiments, though, was that you could not be a successful writer by taking off six months, or even a year, with the hopes that you would strike it rich, so that you could continue. Instead, you had to find a sustainable way to keep going. And I never did.

Now, for the first time in my life, I won’t need to earn money. I will have the opportunity to be a writer into perpetuity. This is the way (a nod to Star Wars day, for those of you who understand it – May the 4th be with you). It takes time to grow and develop, and I am looking forward to it. 

What will I write, you ask? Anything. Everything. Nothing (or a story about nothing). I will figure that out. It doesn’t matter, because it is a way of life. It is not a career; it is a practice. It is a spiritual journey. It is about becoming. It is about being. It will define itself. And I won’t sit here today, so many days out, and make promises. I won’t even promise that you will ever get to read anything (although if you asked me, I could give you something to read today.  You’re reading this). I do have ideas. But ultimately the writing will take me where it wants to go.

331 days

I am planning on retiring. And this is my diary to countdown the days.

331 days until.

I’ve been an accountant for a long time.

It was never my intention to be an accountant long term. I needed to know myself better. And for that I needed space, and independence. I figured I had to buy my freedom. So, I got a job. Figured I would make me some money while I matured. And then I would do what I really wanted.

It was my fault I never did what I wanted. Word to the wise: You are the one that lives with the consequences of your decision, ergo, it is your responsibility to take charge, ergo if you don’t, it’s your fault. Others may fight you, but it’s on you to express yourself, to push your personal agendas and dreams. You shouldn’t blame anyone else, but if you must, then do it to take control, not in defeat and resignation and as an excuse..

On that note, I’m tired of pretending that I am someone I am not for the benefit of others. My employer actually says to the millennials, and the younger than millennials (whatever that is), that they should bring their authentic self to work. They mean come out of the closet, be open about what you need and want, be happy, and you’ll work hard. But being authentic isn’t just about such obvious things. I have coworkers who are best friends outside of work. For them, work must be like hanging out with the people you feel most comfortable with. I’m not and never have been “most comfortable” with anyone. So, I pretend. I wear a face. It’s not that I dislike the people I work with. I’ve been there, too, and I didn’t stay at those jobs, but I still put on a face at work, and even, to a lesser extent, at home.

It’s no one else’s place to tell me who I am. Not that it’s their fault. 

Ironically, I’ve often said, that I should have been an actor because I love pretending to be someone else. But that’s not as contradictory as it seems, BECAUSE fiction = truth, ya hear me? Amirite?

So, I’m looking forward to finally finding myself. It will be different than if found it young. I won’t be an actor, or write for Star Trek. I won’t have to find the right career, and that’s good and bad, good because I also won’t have to make the money. But am I too old? Let’s be honest, I don’t know. I don’t know what I could have been, probably can’t be whatever that was now. But I’m not set in my ways. I’m set in the ways that I always wanted to live, but never did. I still want that. It may look to people like I am reinventing myself, changing. But this will be (I hope) who I always was. I feel like I will have to reject what everyone knows of me and start relationships over. It may be shocking, but I like to imagine that it will all make sense to them once they see it.

I’ve told my employers that I was open to doing some contract work because a little extra money is always nice, but mostly because I feel bad taking my knowledge away and want to help with the transition (as if giving them over a year’s notice isn’t enough). I’m re-thinking that. Maybe I want to leave that person behind.

Also, because in retirement I’ll have many jobs. I’m already mapping them out, and I don’t know how I’ll have enough time as it is.

350 Days

I am planning on retiring. And this is my diary to countdown the days.

350 days until.

I should be happy, but I am feeling very overwhelmed. It’s not because I’m a short timer that I’m unmotivated. I want to finish strong. I am overwhelmed both by the pressure to achieve certain things before I leave work, but also, and maybe more so, by personal pressures.

I struck a deal at work that I would take all of my vacation this year. There’s vacation still that built up during the non-vacation taking days of Covid that add to my current year’s allotment.

Making a point of taking all of this time was to make this last year more relaxed, but it has the opposite effect. Taking time off makes me stress more about the things that I need to do, because I have less time to do them. And traveling for these vacation days, as opposed to taking the time off around the house, also puts off personal to dos, and I have many.

And I hate my house. I hate the clutter. I want to do something about that, but can I? I have so many things I want to do. Where will I start?

Our dog died recently. She didn’t exactly die on her own. She got close. But anyway, now we can replace couches and rugs and such, things we were waiting to do because in her later months, maybe more like her later year, she peed in the house a lot.

But replacing furniture isn’t as easy as it sounds. It, too, is work. It, too, is something I want to do right. What do we want? What do I want? I can guarantee you that what I want, when I figure out what it is, because in terms of interior design, I have no imagination, will be different from what my wife wants. I want simplicity. I need simplicity.

Why should I care? It is shelter. And I’m grateful to have it. A roof over my head. Somewhere to sleep. But if that’s all it is, I want to buy the cheapest couch there is. If I’m going to hate it, if all it is, is shelter, as if that’s a small thing, then I don’t want to spend money on it. If I spend money, I want to love it. Let’s imagine getting rid of everything and starting from scratch. What would that look like? I would like to do that, because I hate everything. Our entertainment cabinet is dated. Our living room seems smaller than it could. I don’t like the colors. I hate the fact that the kitchen is open to the living room, but I don’t suppose we can change the way the house is built. I hate the bookshelves that narrow our walkway behind the couch we want to replace. Do we need all of those books? I hate the kitchen cabinets and their dated dark wood. I hate knick knacks and picture frames.

I am depressed and as I contemplate the retirement I always wanted, the time to spend on the jobs I always wanted to do, I think a lot about how many years I have been depressed, and I wonder if I know how to do it differently. It’s almost as long as I can remember. I hated school. Maybe not 9th grade, my last year before high school, but the rest. I saw a little musical slideshow put together to celebrate my high school, a branch of the FAME school in NYC, The High School of Music and Art. A performing arts school.  That should have been great, right? Everyone’s dream. It pains me to watch it, the way it also pains me to think about or visit Bard where I spent 2 ½ years in college before I couldn’t take it anymore and transferred to Hunter, which I do look back on fondly, but it’s also where I became an accountant. The memories pain me because I was always depressed, and depression always held me back. I think about the wasted potential.

I don’t look back and say, those were good times. I look back and say I missed an opportunity to have the good times that other people had. I have always struggled to appreciate whatever was going on in my life when it was happening. And on the verge of having what I’ve always pined for, time, I’m mad that I spent so many years in a career I never wanted. Why did I do that?

But things are different, or soon will be. In 350 days, I will be free.

But I don’t know. There’s so much to do. So much expected of me too, besides what I want for myself. Will I get to live my life?  Will I finally be happy? It’s a little hard to believe in it.

Mental Health

We didn’t talk about it much back in the day, and now everyone is talking about it. It went from a stigma to almost looking at it as an excuse. I can’t do this or that because I have to take care of my mental health, right?

What’s wrong with people these days? 

The thing is, we are not the happiest country in the world, far from it. And we haven’t been for a long time. People are getting therapy and medications to, essentially, help them deal with an admittedly difficult reality. The world is a scary place. Human beings are not the nicest. But should we really need to teach people, or drug people, to deal with reality? Maybe that’s a problem with reality.

If people are unhappy because they are stressed about money, or health, or how difficult life is, or politics, or sexism, or social injustice, or even just because they go to high school, maybe what we really need to do is change society.

Until we can to that, coping is something that they may need assistance for, but at the point at which it becomes a nationwide phenomenon, accompanied by an epidemic of suicide and even when it doesn’t get that far, anxiety, depression, unhappiness, or even just a failure to thrive, we need to address the real problem.

I applaud the fact that people are being open about it. Even though it bothers me if a child of mine seems unmotivated or unambitious because they don’t like stress or whatever. I moved out when I could. I supported myself. I did what I needed to do. I dealt. But was I happy? Am I happy now? Quite frankly, no. Watching them struggle makes me even more unhappy, but I don’t want to fault them because they expect more, because they won’t settle. They shouldn’t have to adjust their expectations, like I did.

So, ok, but maybe therapy and medications are only a temporary solution.

The more permanent solution?  Don’t laugh; higher taxes. The countries with the highest taxes, after all, also have the happiest people.

That’s because they get a living wage. That’s because if they were to lose their job, they don’t also lose their health insurance, if they even had any in the first place. That’s because they don’t have to pay for their education. Maybe they can afford housing. Maybe they can afford childcare. Maybe they can get help if they need it, and that helps alleviate anxiety, even when they don’t need it. Maybe they have pensions when they’re old. They have services for their taxes, safety nets. The gap between rich and poor is less, but more importantly, there are less poor, period, and more middle class.

Here in the US of America, too many think that taxes is a redistribution of wealth from rich people who earned it and deserve to keep it.

Let’s correct that. The rich didn’t earn everything they made in a vacuum. They have benefited from a lot of help. No man is an island. We are all in this together. And we all have the right to the pursuit of happiness.

395 days

I am planning on retiring.  And this is my diary to countdown the days.

395 days until.

What is my final year going to look like?  So far I have put a lot of pressure on myself to leave my team in a good place, to achieve long sought goals. To teach and transition for a seamless exit.

I have been frustrated, and it’s an old issue. I say, “these are the resources I need to guarantee success,” and I am told, first that they agree, and then but…. or something akin to no, like, here are the hoops to jump through, or the cases to prove, and alternatives to explore. Or, I could just fail….

Truth be told, I never wanted to be an accountant. I wanted to make money, sure. Accounting is a good career. I recommend it for people who want financial independence. I wanted to move out of my parent’s house. I wanted to buy freedom for myself, eventually, with the money I made doing something that didn’t particularly have a lot of meaning to me.

I did move out of my parent’s house, but for the most part the sacrifices I made working, didn’t always feel like they got me what I had dreamed about.  I had a family, and I enjoyed that, but I could have had a family with less money.  I could have been more present for my family, if I was happier. Did I have money in the bank for the sacrifice I made? For many years I had debt. I eventually turned that around. But did I have things I wanted? What did I want besides time off? My feelings towards working waxed and waned. As a contractor I had some freedom, and at times worked flexible hours. At other times took months off, but only to return.

None of that matters now, because I am almost there. I am retiring, a little bit early, but not really. I’ll be 59 ½ when I retire, a magic number at which I can withdraw from retirement accounts without penalty.  Better than many, but not that early. As I struggle for a successful last year, it becomes obvious that the conflicts and challenges I have to navigate, are the same as I’ve always had. It feels, still, like I am responsible for successes that I am not given the authority or resources I think I need to achieve. For years I have said we need more people, more technology and for years it falls on deaf ears. I have complained that I will inevitably miss something. I’ve asked “how badly do I need to fuck up before someone listens when I say we are at risk.” I have argued that my team is too small to plan for succession, to cross train, to have the levels of review I think we should have.

So why do I think now, just because it is my final year, that suddenly my leaders will trust my opinion? I told my team that I hoped this last year would be my best.  I joked that as I delegate everything, to pass along the knowledge, I’ll finally become the manager I should have been all along, and maybe even start loving the job. It’s a joke, but not completely. Then, the other day, I complained to the manager under me that instead, I am stressed. I want to achieve the same goals I have not achieved these past 5 years. But I’m beginning to understand why I never did. The pressure I put on myself leads me to anger over conflicts I have with my leaders about how to get there. And why? Why should I care if they hire more people, or implement the right software. Why should I care if I can’t create out of excel a complicated, yet easy to understand tax planning tool. I’m good at modeling, but I am not a computer programmer, and the parameters, the needs, the wants, that come from above are incompatible with the simplicity and ease of understanding that I am charged (or charge myself) with achieving.

I do care.

But if they won’t give me what I need to get the job done, then I just get the job done that I can. And if they accuse me of dogging it, even if they are wrong, that’s not my problem. Once I’m gone, they can continue to blame me. I’m ok with that, I told them as much. Protect yourselves, I said. I don’t mind if they say it, but I don’t actually want them to believe it. All of the things I want to achieve before I go are for them. But I will not be the one that struggles if I can’t provide them.

Reminds me of the semester before I left Bard College, to ultimately study accounting at Hunter College. I was active in the student government, and I cared about the issues that we dealt with. My sense of fairness and logic drove me to care. This had been a big part of my college experience, it was the part I liked, and not why I was leaving. So, I was arguing a position for something, I don’t remember what, alongside my best friend, who was staying. The person we were arguing with, John Carroll was his name, said to me, “YOU’RE NOT EVEN GOING TO BE HERE!” 

And it stopped me in my tracks. Because he was right. I realized that he was right. I shouldn’t have a say. And I shouldn’t really have a say in this case either. Except for one thing.

When I first gave my notice, over a year in advance, it was because I didn’t want to leave my team hanging. I told them at the time, that I could leave earlier, but I didn’t want to abandon people. I told them, that if I stay, I want to see them preparing for my transition, because if I were to make the sacrifice, I didn’t want to be in the same position a year from now.  I didn’t want it to be for nothing. At that time they told me that 1) They could promote the person under me without me having to leave.  2) They could backfill the headcount while I was still here, to afford the team the resources such that I could pass along my tasks and 3) I could take all of my vacation – I have pandemic year vacation that has rolled over, so I have a lot. And that would make my last year less stressful, almost part time. But, as has been typical, now they tell me they can’t do 1) or 2 (though they can’t stop me from taking my vacation). 

So, I could leave earlier. My subordinates can all be promoted. And I won’t have to be frustrated by the lack of trust that I feel when I can’t get anyone to respect my judgement, born of experience, and hear me. But, in truth, I don’t want to leave just yet. My finances are about there, but I like the idea of letting the market rebound a bit more and make one more year of pay, and one more bonus and one more year of benefits. So, staying is not actually the sacrifice I said it might be. But I also don’t want this last year to be stressful. And I don’t want to complain and fight about resources they won’t get for my team, because, as John Carroll said, I’m not even going to be here. I shouldn’t really have a say as to what the team is like after I’m gone. I should just do what I can with the resources they allocate now, and the rest is going to be up to them.

Whoopi Goldberg is Not Antisemitic

Granted there are black people that, unfortunately, harbor antisemitic feelings. I’ve seen it. This could have been influenced by Farrakhan, or maybe a real or imagined sense that certain music producers who happen to be Jewish may or may not have taken advantage of black artists. Maybe some black people, in their kinship with other oppressed peoples, sympathize with Palestinians. What does that have to do with Jews in Brooklyn? Or Jews in Israel on the left. Israel is a country. Do people hate all Americans because they disagree with Democrats or Republicans? The extrapolation from grievances towards specific Jewish people to Jews as a whole is the very definition of antisemitism. And this happens, and it is unfortunate.

But it bothers me to see, over and over again, the vilification, by self-professed antisemitic watch dogs, of black people who should be our allies in the fight against racial injustice as a whole.

Whoopi Goldberg is a perfect example. She said that the holocaust wasn’t about race, and was suspended without pay for daring to voice this thought, and then walked it back, said she was wrong, and the attacks persist. Dave Chappelle, who has also had similar charges levied against him made a good point in his defense of Kyrie Irving. He pointed out that although Jews have been through some really horrible stuff, one thing he is sure of, is that it wasn’t the fault of black people.

It’s not that black people can’t be antisemitic, or can’t be wrong about the holocaust, or that Jews can’t be racist either. It’s that Jews and Black people have both historically been oppressed. We can argue about whether the holocaust was worse than slavery or the genocide of Native Americans too. Maybe it was. It’s not really a contest. The history of all three of these peoples, and many more who suffer, are directionally the same. Our real enemies want us fighting. That’s how they win. The way we win is that we make peace with those with whom we have common ground.

We should be meeting at the table to learn from each other. We should not be joining the fray against other oppressed groups. It is wasted energy to attack Whoopi, or Dave, or Kyrie (Ye – he might be a different story). That energy is better spent elsewhere.

Does it really matter if someone doesn’t think the holocaust was about race? Is that thought so unforgivable? Judaism is a religion, isn’t it? Hitler may have viewed Jews as a race. Are we going to fight with each other over whether we all see it the way he saw it? Or he may have just needed a scapegoat for power. I don’t know. I could philosophize on this on either side without ever suggesting that exterminating 6 million jews, and 9 million people overall (and that doesn’t count those who died on the battlefield) was anything other than a blight upon humanity.

I know Whoopi. We grew up in the same very diverse neighborhood in New York City. Her mom and my mom worked together. We’ve hung out. She’s not the enemy, and the discussion that needs to happen won’t happen if people like Whoopie and Dave and Kyrie (and even Ye) don’t speak their minds.

We need to change the way people think and we need to know who is worth the effort. We need to strengthen our bonds with open minded people, like Whoopi, when they stand corrected. And even if they won’t change their minds, even if they won’t be made to apologize, we need to find common ground and stop wasting our time in-fighting.


Our dog, Cami, is very old.  I don’t know, 15 or 16 years. She’s a beagle mix (but she doesn’t look like a beagle). I know she won’t live much longer. I’m ok with that. But my wife and I are having a fight about her end of life.

Every time Cami shows signs of decline my wife gets very emotional, more than I do, and wants to have the “conversation.” When I argue with her, she says she’s not talking about “today,” but I think if I agreed with her, she’d have the vet come over and we might well do it today. If Cami stumbles up the step on our back deck, or pees on the deck, without going down the steps then it becomes “she can’t go down the steps anymore,” even though I see her going down and up all the time.

Cami is old, no doubt. She acts old, stiff when she first gets up, like me, frankly, I’m getting old too. I’m peeing more often too. I’m not going to kill her for that, though I’m not peeing in the house. Cami is. But I want to know that she is in pain. It seems obvious to me that her worst symptoms have come as the result of medication, but my wife seems to resist seeing the connection, despite that I spell it out for her. We’ve been here before, thinking it was the end, and then took her off some medications and she improved, but the vet left her on one, gabapentin, saying “it can’t hurt to have an old dog on that.” It’s an anti-convulsant that is prescribed for humans, but prescribed off label for dogs for seizures (which Cami doesn’t have) anxiety (also not – she’s less anxious because she can’t hear anymore, although if you sneak up behind her it will startle her; my wife cites that as evidence that she is anxious) and it is also prescribed for pain. Whether she has pain is up for debate in our house also, but that’s why she takes it. The assumption was that because she walks like an old thing, and has trouble getting up sometimes that she must be arthritic and in pain. When I tell my wife I don’t see the signs of pain, just loss of ability, she says that dogs hide their pain, which may be true, I don’t know. But if that were proof, then every dog every where at every age would have to be in pain. All that really means is that we don’t know. But I don’t buy it. Who decided that and how? Did some dog explain that to someone?

“You look good, what’s your pain on a scale of 1 to 10?”


If someone figured out that a dog was in pain even though it didn’t look like it, then there must be a way to tell. I think I could tell. She would be trembling, or she would not want to move (actually we’ve been there before when she hurt her neck and then she healed), or she wouldn’t be eating.

Lately she has had bouts of drunkedness, like she can’t even control her legs. She will walk sideways like one leg doesn’t work, and like she doesn’t know where she is or how to sit down. At it’s worst, her legs will splay out into a split. She won’t be able to stand up. It’s at these times that if we can even get her outside she does have trouble with the stairs. But then in the morning, she’ll be able to stand up and walk, she’ll be fine again, her normal old dog self.

Here’s the kicker. We only give her the gabapentin at night and her worst symptoms are only at night. Not only that, but sometimes, like two nights ago, she won’t eat her gapapentin, she manages to leave it uneaten in the bowl, all by itself. That night, she came in from outside hopping around excitedly like a puppy. I actually thought she might hurt herself jumping around like that.

Gabapentin is a people medicine, and I found a description by a person of what this medicine does to them, weakness, and even bladder problems. Dogs can’t talk, but people can.

I’ve also found comments on a page about this drug from dog owners who describe the same kinds of symptoms that I am attributing to the gabapentin to their dogs, and worse.

My wife says the peeing in the bed is a sign. “Dogs just don’t do that,” she says. But they do, if they can’t get up because they’re drugged.

I am ok with letting Cami go. Sometimes I hope that she just passes peacefully in the night so that we never have to make a decision. I will be relieved. I look forward to having the freedom of not having a dog again. She’s had a long life, longer than average, she was there for all of our kids until they became adults, and she can’t live forever. I’m ready, but I’m not impatient. I want to wait until she’s ready. If I thought she was in pain, or if she had cancer, and I knew the pain would come, I would be able to ease her over.

But she can still get comfortable. She still gives and receives love, maybe more than she used to.

I don’t want to be fooled into thinking this is the end because she’s taking a medicine that she doesn’t even need that makes her seem even older than she is. If we take her off it, and she seems like she has some pain, there are alternatives.

My wife is getting so mad at me because I am pushing back on her. She thinks she’s the one protecting our dog. She’s convinced Cami must be in pain, even while lamenting that dogs can’t talk and tell us what’s going on. Cami has her moments, good and bad, but so far when she does seem bad, it’s still temporary. She keeps recovering.

Let her enjoy her last days, that’s all I want. We can deal with the pee. Maybe taking her off the medicine will help with that.

I gave her some of my breakfast this morning. She was very excited about it. I can still make her happy.

Why should I deny her that? I’m not going to. Not yet.

Addressing Roe

I’m disappointed with how i see the left framing the overturning of Roe. The issue is not as clear cut to me as voting rights, or racism or freedom of speech. Is it so hard to understand someone who sees that embryo’s potential? Are they hateful, selfish, uncaring and mean, for caring about the baby?

I know, it’s just potential. There is potential in every egg and sperm. They can’t all be babies. Maybe it was never meant to be. Maybe it was never going to be. But it is not unreasonable, to think this is no longer just spilled seed,  no longer just an egg that passed in the night.

I consider myself pro choice and anti-abortion. Is anyone actually pro-abortion? There is an opportunity here to cast a broader net to bring in more supporters of choice, regardless of their reasons. If we can acknowledge that the issue isn’t just about whether that baby is real, but about whether anti-abortion laws work, then maybe we can agree that making something illegal doesn’t always make things better. Sometimes it doesnt achieve the result we’re looking for. Sometimes it makes things worse.

Anti-abortion sentiment, doesn’t just reside with the religious right. It can come from anyone who loves kids. But they can understand that there are better ways to lower the rate of abortion, than making it a crime. And we can and should seek broader support for those solutions.

But the religious right support policies that lead to circumstances favoring abortion, and then they expect to be able to reverse all that by creating a law. They seem to forget that before abortion was legal, women still had them, felt forced by circumstance to do so, and sometimes died trying. They don’t want to support effective measures to lower abortions maybe because they’re committed to an absolute that will never come to pass, illegal or not. If anyone thinks they can ever completely eliminate abortion, they are denying reality.

The religious right is against contraception. They are against pre-marital sex. They are against welfare. They are against national healthcare, They are against free education. They are against minimum wages. They are against all of the safety nets that would make it easier for people to choose life, to make life easier in general, to actually promote family, and to top it off, they judge and ostracize women who get pregnant out of wedlock, but not typically the men who put it there, even sometimes in cases of rape. They are against family planning in general, other than abstinence – the failure of which is known, and to think otherwise is another denial of reality. 

Put simply, their policies lead to abortion, putting more women into the circumstance in which they must contemplate what has been made into an impossible choice. Should they sacrifice their own dreams, or live a life of second guessing? Because abortion is not, and this is something I wish the left would acknowledge a little more often, without it’s emotional toll on the woman who chooses it.  

And to add insult to injury, these same supporters of the political right care little about gun control, little about whether the babies already born have the right to survive elementary school.

The left, if it wants to win on all of these issues and more, needs to cast a wider net, and marginalize the extreme by including in our fight, those reasonable people who don’t like abortion, for obvious reasons. Together, we can support children, families, women. We can minimize abortion by minimizing unwanted pregnancies. Does it need to be pointed out that people don’t typically abort pregnancies they got on purpose? And we can make it easier for those on the fence to choose life by supporting people better.

We can tie all of this into the many liberal values that make life, in general, better and more civilized.  Making something you disagree with illegal isnt the answer. It’s often nothing more than symbolic. What has the drug war done other than promote crime, the creation of stronger drugs and overdose deaths?

There are better more effective ways to address these issues. Reasonable people should work together to do so.


What’s the Big Deal About Stock Buybacks?

When a company makes money, and in particular when a company has cash on hand (free cash flow) from its operations, there are a limited number of things that the company can and should do with that money.

They could make charitable contributions, and they could contribute to the communities in which they operate and they could find other ways to be good stewards for society, joining the fight for diversity and the health of the environment and it can pay its employees well, and contribute to their health and retirement, etc, and many companies do some of that, for the goodwill of the community, if not altruism.

But their main purpose, why they exist, why people own them (such as in their 401ks), is to make money.

And so the three main uses for their free cash are as follows: 

  1. Invest in the business to grow it
  2. Pay down debt, if they have it
  3. Return profits to shareholders

Companies do all of those things, but in particular, a lot of focus is put on the return of profits to shareholders because that is the real reason companies exist.

And there are two ways to do that

  1. Dividends
  2. Stock buybacks

Stock buybacks seem to be very political lately. I am a democrat. But I don’t agree with how this issue is framed, by democrats, as if it is a way to unfairly manipulate stock value, which, to me, demonstrates a lack of understanding. Or maybe some complain, not unreasonably, that it defers tax, because it can increase the value of the stock and that increase in net worth is not taxable until stockholders sell, while dividends are taxable immediately. But it also encourages some to sell (the company buys back from someone), and if they’ve held long enough to be in a gain position, that could accelerate tax. 

The real reason that corporations do this is because there are times when it is just a more efficient way to return money to shareholders than dividends.  When? When the company thinks the stock is undervalued.  Making that determination can be complicated, and subjective, based on factors such as the value of the assets, earnings, and growth potential. They could be wrong, but the management inside the company should know the company better than anyone. Assuming it is undervalued, buying back stock makes more economic sense than paying out dividends. Here is a simple, less subjective, example of why that’s true.

Assume that a company sells a million shares of stock for $1 a share.  Now the company is holding $1,000,000 in cash, and absent any expectation of earnings and growth, the shares should be worth $1 a share, because each share represents 1 millionth of a million dollars.  

But suppose for some reason the market doesn’t recognize that value and the market price is only .50 cents, meaning that if I wanted to sell my shares I can only find people willing to pay .50 cents for it. It doesn’t have to make sense. The market doesn’t always make sense. But let’s also assume that at some point in time, a time we’ll call “true worth,” all value will be recognized by the market and the stock will be at $1 per share.

If the company decided it didn’t need $1,000,000 and it wanted to return $500,000 to its shareholders, it could pay a dividend of .50 cents per share (technically if the company hasn’t made any money yet, that’s a return of capital, not a dividend, but nevermind that).  Now, after everyone gets their dividend, there are  1,000,000 shares and $500,000 cash in the corporation, so at true worth, each share will be worth .50 cents. Owners would have paid a dollar, got .50 cents back in cash, and still have stock worth .50 cents.  They haven’t made any money, they haven’t lost any money.

Let’s assume instead that the company took that same $500,000 and decided to buy back as much stock as it could at .50 cents a share, the undervalued market price, and give whatever is left as a dividend.  And let’s assume that shareholders were willing to sell 500,000 shares at that price, and the rest wanted to hold on.  So now the company spends $250,000 to buy back 500,000 shares. The owners that sold have lost money, but they didn’t believe in the company, and maybe they think they could have lost more, that was their choice. 

Those who remain are the ones who really believe in the company, and they now, collectively, own 500,000 shares of a company that has $750,000. At true worth, each share will be worth $1.50  If the remaining $250,000 is paid out as a dividend, they get .50 cents and then they still have stock worth $1 per share, because the company has $500,000 and there are 500,000 shares.  Either way they are 50% better off, and the company hasn’t even made any money, because it took advantage of being unappreciated when it returned value to shareholders.  

This doesn’t work if the shares are overvalued. If the company paid $2 a share to buyback shares, they’d end up with 750,000 shares outstanding with $500,000 and true value would be .75 cents a share, which would have rewarded those who sold, and punished the remaining shareholders, by pushing the true value down. That ultimately hurts shareholders including executives of the company that still hold shares (and most do – even though they might sell some from time to time).

Buying back shares when the stock is undervalued also helps the market recognize the true value, because it weeds out the owners that don’t see it, buying back, by mutual agreement, their shares, and leaving the owners who are committed, which in turn also protects against an opportunistic takeover from some big money source that recognizes the bargain. What if I noticed that I could buy a company that had $1,000,000 for $500,000? I could do that, screwing all the little guys who had this stock in their 401Ks and making $500,000 for myself. And then maybe I just raid the cash and fire all the employees. Is that what we want? 

Not this democrat.