Letters to the Editor of Barrons – Barron’s

Eric J. Savitzs cover story, Oracles Next Quest (Feb. 19), misses the point about why Oracle was late to the cloud computing game. One reason that Oracle was late is that it has used its cash flow and debt to fund stock buybacks instead of growing the company, and thus underinvested in the cloud computing business.

The article notes that Oracle has been giving back to shareholders by reducing its outstanding stock 40% in the past 10 years. That was a mistake for shareholders. The funds used for buybacks would have been better spent investing in the company, so that Clay Magouryk, executive vice president of Oracle Cloud, could have built more than 30 physical data centers in the past six years.

It is an assumption on Wall Street that stock buybacks are beneficial to shareholders. But this assumption has never been proved. They are often a waste of shareholders moneyjust ask the shareholders of Walgreens Boots Alliance.

In the case of Oracle, the money used for stock buybacksover $66 billion in the past three years, of which $32 billion was borrowedwould have benefited shareholders more by being invested in the business.

Richard L. Hecht, Larchmont, N.Y.

To the Editor:

Vanguard has proved to be a reliable, conservative home for long-term money (Barrons Best Fund Families of 2020, Feb. 19). Trying to chase top-performing managers will only create tax liabilities.

My philosophy is to stick with successful managers and move money as infrequently as possible. As in, never. The more money is moved, the more taxes will eat up, leaving less to reinvest.

Its a safe bet that todays star performers will be tomorrows laggards. Looking at one-, three-, and five-year rankings tells nothing about who will be on top at the 10- or 20-year mark.

As my pappy used to say: It all comes out in the wash.

Stuart Kinzler, on Barrons.com

To the Editor:

Excellent interview (Felix Zulaufs Guide to Crazy Policies, Investment Bargains, and Bitcoin Mania, Feb. 18). Zulauf and I are related, ideologically speaking.

I am especially keen on the agriculture call and oil. The climate mania will eventually run its course because people need a stable and reasonably priced source of energy. And, heres a surprise, people need food, even in a world of population decline. They need food with protein, and that means meat and that means corn and beans.

William Butcher, on Barrons.com

To the Editor:

Its always great to hear from Zulauf, as his insight throughout the years has been thoughtful. But as with all ideas and investments, its about timing. Everything he says may eventually come to fruition, but a lot can and will happen in between.

That is the opportunity cost to consider.

Dennis Kramer, on Barrons.com

To the Editor:

In Welcome to Earnings Valhalla. Why Stocks Can Still Shine, (Streetwise, Feb. 19), David Kostin of Goldman Sachs predicts that the Federal Reserve wont change short-term interest rates until at least 2024, so youre looking at multiple years of interest rates basically pinned around zero.

For the forgotten generation, retirees who have been losing considerable income due to ultralow interest rates for the past 12 years, its effectively the same as being unemployed. I wrote to the Federal Reserve, my senators, and my representatives that they should push for no required minimum distributions as long as interest rates are near zero, but so far to no avail. We retirees should keep trying.

Ron Minarik, Mystic, Conn.

To the Editor:

Andrew Bary writes that Buffetts view has been that a dollar in his hands is better than one in the hands of shareholders (Warren Buffetts Shareholder Letter Could Lift Berkshire Hathaway Stock. What Investors Want to See, Feb 19). Ill say it certainly is. That dollar, returned to me in dividends, nets 75 cents after tax. If Buffett retains ithe invests it for me: $1 retained versus my 75 cents.

If you want to engage in an investing contest and give Warren Buffett a 33% head start, ask for a dividend. The legendary 90-year-old investor may have lost five miles an hour on his fastball, but Ill pass on that one. Plowing excess cash into buybacks of his own cheap stock is both efficient and wise. And hes doing that at a record-setting pace.

Excess capital is a concern, as Bary rightly points out. But a large-scale Dutch auction buyback might be a better choice than a dividend initiation.

John Mooney, Marshfield, Mass.

To the Editor:

Two categories of people offer market predictions: those who dont know, and those who know they dont know.

Nicholas Jasinski and Carleton English might be the exceptions. Their thoughtful Trader column (Feb. 19) makes sense of recent events and provide potential trends. Their keen logical analysis of the banking sector offers clarity as to why that sector recently appreciated, and what may happen next.

Joel Goodman, Centennial, Colo.

Send letters to: mail@barrons.com. To be considered for publication, correspondence must bear the writers name, address, and phone number. Letters are subject to editing.

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Letters to the Editor of Barrons - Barron's