March1,2021 BARRON’S 35
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Why Oracle
Was Late to
The Cloud
To the Editor:
Eric J. Savitz’s cover story, “Oracle’s 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 forbuybacks 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 buy-
backs arebeneficial to shareholders. But this assump-
tion has never been proved. They are often a waste
of shareholders’ money—just ask the shareholders
of Walgreen’s Boots Alliance.
In the case of Oracle, the money used for stock
buybacks—over $66 billion in the past three years,
of which $32 billion was borrowed—
would have benefited shareholders
more by being invested in the
business.
Richard L. Hecht
Larchmont, N.Y.
In the Vanguard
To the Editor:
Vanguard has proved to be a reliable,
conservative home for long-term
money (“Barron’sBest 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.
It’s a safe bet that today’s star per-
formers will be tomorrow’s 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
Pondering Zulauf
To the Editor:
Excellent interview (“Felix Zulauf’s
Guide to ‘Crazy’ Policies, Investment
Bargains, and Bitcoin Mania,” Feb.
18). Zulauf and I are related, ideologi-
cally speaking.
I am especially keen on the agri-
culture call and oil. The climate
mania will eventually run its course
because people need a stable and rea-
sonably priced source of energy. And,
here’s 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:
It’s always great to hear from Zulauf,
as his insight throughout the years
has been thoughtful. But as with all
ideas and investments, it’s about tim-
ing. Everything he says may eventu-
ally come to fruition, but a lot can
and will happen in between.
That is the opportunity cost to
consider.
Dennis Kramer
On Barrons.com
Forgotten Generation
To the Editor:
In “Welcome to Earnings Valhalla.
Why Stocks Can Still Shine,” (Street-
wise, Feb. 19), David Kostin of Gold-
man Sachs predicts that the Federal
Reserve won’t change short-term
interest rates until at least 2024, so
“you’re looking at multiple years of
interest rates basically pinned
around zero.”
For the forgotten generation, retir-
ees who have been losing consider-
able income due to ultralow interest
rates for the past 12 years, it’s effec-
tively the same as being unemployed.
I wrote to the Federal Reserve, my
senators, and my representatives
that they should push for no re-
quired 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.
Buffett’s Buybacks
To the Editor:
Andrew Bary writes that “Buffett’s
view has been that a dollar in his
hands is better than one in the hands
of shareholders” (“Warren Buffett’s
Shareholder Letter Could Lift Berk-
shire Hathaway Stock. What Inves-
tors Want to See,” Feb 19). I’ll say it
certainly is. That dollar, returned to
me in dividends, nets 75 cents after
tax. If Buffett retains it—he invests
it for me: $1 retained versus my 75
cents.
If you want to engage in an invest-
ing 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 I’ll pass on that one.
Plowing excess cash into buybacks
of his own cheap stock is both effi-
cient and wise. And he’s 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.
Prognostication
To the Editor:
Two categories of people offer market
predictions: those who don’t know,
and those who know they don’t
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.
“Everything [Zulauf] says may
eventually come to fruition, but a
lot can and will happen in between.”
Dennis Kramer, on Barrons.com