By James Saft
(Reuters) – Apple’s emphasis on share buybacks is a strikingly similar error to the Federal Reserve’s dedication to buying U.S. Treasuries.
Call it the financial fallacy, the modern tendency to concentrate on the often ephemeral movement of numbers on traders’ screens rather than the much harder to manage real world.
Both institutions are reacting to deteriorating fundamentals by concentrating their firepower on influencing securities markets.
Sadly, you usually do better by improving the fundamentals in order to influence markets rather than trying to change the markets to improve the fundamentals.
Both Apple and the Fed might be better off simply putting more money directly into the hands of their stakeholders, in the case of Apple via dividends and in the case of the Fed by simply doling out cash to citizens.