The 11th Reason Equities Are Dead: We Don't Need A Stock Market Anymore

John Chambers

Photo: Associated Press

Yesterday it was reported that Microsoft would take on debt and buy back shares.HP has announced the same thing, and today Cisco says that its taking on debt to pay a dividend (which is similar).

The fact is that if you’re a big blue chip, it behooves you to take on as much debt as you can — super-cheap capital at these rates — and buy up all your equity, which is expensive capital.

And if a company won’t do it itself, no doubt there are some PE shops looking at making the same calculus (although a PE shop isn’t likely to be able to get capital quite as cheaply as a company can itself).

But bottom line, with rates this low, there’s just not much reason to finance via equity. It’s all about debt.

Now see the first 10 reasons equities are really dead this time >

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