So, as well as not knowing that stock indices are not inflation adjusted, he doesn’t know that they measure market capitalisation either:
Eric Smith says:
November 11 2025 at 8:09 pm
Richard,A number of FTSE 100 firms have indulged in share buybacks and this has fuelled the big increase too.
For example Lloyds Bank has done so two years running.
+2
Reply
Richard Murphy says:
November 11 2025 at 8:21 pm
Agreed
No. For:
The total market value of a company is calculated by multiplying the share price of the company by the total number of shares they have issued
So fewer shares at a higher price as a result of buybacks changes FTSE by…..nothing.
Mentioning Lloyds Bank, it appears that they delved into the bank accounts of 30,000 of their employees to demonstrate that they didn’t really need the wage rises the unions were asking for……..
Allwawys suspected stuff like this would happen. When i started work for a.n other high st one, i was obliged to set up a current a/c with them in order to be paid. So on pay day I used to withdraw all of it in cash on my lunch break, pop over the road and pay it in to my pre-existing a/c with their competitor.
Shouldn’t the market cap actually fall (ceteris paribus)? These buy-backs are usually in lieu of a dividend and are effectively cash exiting the company?
I’m OK with that. But can we at least agree that Spoud’s thought that buybacks push up FTSE isn’t correct?
Yes we can certainly agree, I make the point only to suggest Murphy has got it arse about tit.
See my longer comment – they will have a small temporary effect, but not a significant long-term one.
With his logic, stock splits would be very very painful for the index.
Out of interest, can anyone remember Spud ever using a technical term correctly or showing any evidence that he understands it?
I think you’re right Marius – phrases such as “tax incidence” and “comparative advantage” he gets lost in. I don’t think he understands the net in net zero. A good dad, birdwatcher and executor though. The recent advice on making a will was sound. Imv of course
To be fair, being a good dad is more important than his views on wealth and tax.
Pendantically, the FTSE indices do NOT measure market capitalisation. They are a set of chain-linked indices of market prices which are weighted, daily, by the market capitalisation of the companies. So when a company buys back shares or issues some when an employee achieves the threshhold for a performance-related share award that has NIL impact on the day’s index. What is *does* do is alter the weighting of the company’s share price in the calculation of the index in subsequent days.
There is one way that share buy-backs can generate a rise on the FTSE indices which is *if and when* the share price is temporarily depressed because there are some effectively forced sellers (e.g. executors having to pay IHT – a frequent occurrence with Lloyds which took over Halifax BOS and all of the non-BOS shareholders were individuals who had been saving with Halifax) and fewer buyers. This, however, is only a short-term correction to a short-term problem and should have negligible effect in the longer term.
In some people’s theories buy-backs which substitute debt for shares should increase the market value of the remainng shares which generally trade at a premium to “net asset value” – but Lloyds (until a few weeks ago and certainly when it made its buybacks) has been an exception to this generalisation as its shares traded at a discount to “tangible net asset value” – so Murphy is wromg as usual
https://www.theguardian.com/us-news/2025/nov/12/jeffrey-epstein-new-emails-donald-trump
Breaking news.
TRUMP AND HIS OLD MAN IN TROUBLE.
What do moral Conservatives think of Trump now?
Non-news: leftard confuses itself. Giuffre (sadly no longer able to provide further information) is on record as saying that she met Trump and nothing inappropriate occurred, unlike other high-profile ‘friends’. Desperate mud-slinging by the Dems.
You do know what “bulled” means, among those of a Caribbean persuasion?
What do I think of Trump now?
I think you are a dumbass.
TDS is a symptom of narcissism. It’s not all about you, dumbass.
What I thought of him when he was a registered Democrat – clever but not someone I wanted to do a deal with.
Market capitalization is OUTSTANDING shares times current market price per share.
A stock buyback will reduce the number of outstanding shares. So next day’s market capitalization will be outstanding shares, a lower number, times current market price. With a drop in OS, and minimal price change, MC will go down. Then it all depends on market price. Theoretically, the stock is worth more, but the market will decide if it will pay more.
BTW, the company doesn’t destroy the shares. They become treasury stock.
They may be destroyed later: Treasury Stock is usually retained to meet requirements to issue/supply stock for stock options (or DRIPs), Scottish Mortgage, Law Debenture et al use sale & purchase of Treasury Stock to help them control the discount to NAV, but there are a few cases where the repurchased stock is destroyed. You are usually but not invariably correct
Not relevant. Treasury stock is part of the capital stock, retained by the company. Destroying treasury stock has no effect on capital stock. I.e., they can reissue it anytime they want to, up to their authorized shares. Destroying it accomplishes nothing. But it doesn’t hurt anything, either.
I think Lazarus Long said that it tidied the place up, getting rid of all those piles of paper.
I assume that for s.842 ITs, the 10% limit on Treasury still exists.
the general idea woukd be to dump low earning cash deposits out of the business, so whats left is the high earning operation, and so it could increase the value of the residual. like demerging a boring bank from a tech firm.