[humanlion87]

I find the whole situation fascinating. Bed Bath continued to sell hundreds of millions of shares while they were preparing for bankruptcy and retail investors (or meme stock investors) continued to buy them. I assume Bed Bath did all the paperwork that is necessary (like calling out risks, that the raised capital will go to creditors first, etc) for such a stock sale. But it is clear they were doing it out of bad-faith to the new investors.

As usual Matt Levine's take on this is a good read.

[neurobama]

The whole stock market in 2023 makes no sense to me, not just Bed Bath and Beyond. So many companies no longer pay dividends. So many classes of stock are now non-voting shares. Common stock shareholders usually get nothing if a company goes bankrupt and liquidates.

So if I don't get dividends, can't vote, and am not entitled to a share of the company's assets, what is the actual value in owning stock? Do I just wait for the share price to go up, sell at the peak, and pass my shares on to the greater fool? That's starting to smell a lot like the worst sort of crypto trading.

[spaceman_2020]

Everything has been fundamentally detached from reality, from stocks to housing.

Houses can sit empty without tenants for years but they’ll only go up. Companies can be unprofitable for literal decades but they’ll keep finding funding and buyers. Commercial properties can bleed tenant but the prices will only be up.

In a world of shrinking growth , stalling productivity, and dying demographics, the market behaves like infinite growth is baked in.

It’s very clear to any observer that the markets don’t follow any rationality anymore.

[FredPret]

> don’t follow any rationality anymore

Anymore? When have markets ever been rational? Markets only line up with reality over the long term. You can point to any instant, and even any decade in time, and point major inaccuracies in the public's collective financial thinking.

> Houses can sit empty without tenants for years but they’ll only go up.

Do you have stats for how much of a problem this is? The problem seems to be vacancy rates that are too low, not too high.

> Companies can be unprofitable for literal decades but they’ll keep finding funding and buyers.

This was a ZIRP (zero-interest rate policy) phenomenon and even then, was very limited in scope. Uber raised billions on a dumb business plan, yes, but that investment is tiny compared to the total amount invested in that period.

> In a world of shrinking growth , stalling productivity, and dying demographics,

Opinions should be based on facts, not over-excitement. Growth has been booming in real terms for centuries now. Many countries are in demographic decline, but overall we still have lots of net population growth for a long time. Productivity is not stalling, and is in fact skyrocketing all over the world.

https://ourworldindata.org/grapher/labor-productivity-per-ho...

> the market behaves like infinite growth is baked in.

Lots of people blindly pump their money into index funds every month. While this raises PE ratios to near-historic highs (not all-time highs mind you) it is by no means "infinite".

I find lots of great businesses with stock that sells for far more reasonable prices, given that they are off of the major indices.

Blind doomsterism doesn't help anyone.

[cycomanic]

> > Houses can sit empty without tenants for years but they’ll only go up.

> Do you have stats for how much of a problem this is? The problem seems to be vacancy rates that are too low, not too high.

No stats on my part, but I have some anecdotal evidence from Australia a couple of years ago. I definitely knew of several apartment complexes which were significantly empty, but advertised rents did not go down. The reasoning behind this was that banks used the previous rent for assessing value (which people used as capital for buying the next property). Because everyone essentially invested based on property price increases not rental income, it made more sense to leave the apartment empty and use the higher capital (based on a previous evaluation) to use for buying the next apartment, than to renting it out and not being able to buy the next property. L

[abigail95]

Australian east coast capital cities are the poster children for low vacancy rates and high prices.

The indicators you need to look for are politicians making it illegal to bid for a rental to obscure prices from market participants.

The percentage of capital gain vs rental income breakdown has been decreasing in Australia since interest rates started dropping 10 years ago.

Now it's going in the other direction, rents will outstrip capital gains because of higher interest - you'll have people saying that landlords are buying up houses and refusing to sell because rents are going up and they are just hoarding cash. You can't win against this argument.

[cudgy]

DR Horton (largest US home builder) is doing something similar right now. Instead of lowering the prices on their homes, they are including incentives by buying down the interest rates on the mortgages of their home buyers. This helps keep the prices of housing higher, which likely allows them to keep borrowing against their inventory, avoid credit calls, and await the Fed to lower rates and return to the good old days.

[spaceman_2020]

Cities have had to literally charge a tax to penalize investors who let their houses stay vacant. You think this would be happening if vacant investor homes was not a problem? [0]

> Many countries are in demographic decline, but overall we still have lots of net population growth for a long time.

Incredible strawman. Population has been growing in Africa and a handful of developing countries. That should have no bearing on valuations in western markets - these population growth centers are neither producers nor consumers of western capital goods/services.

> Productivity is not stalling, and is in fact skyrocketing all over the world.

In your own chart, labor productivty has been growing at a much slower pace since 2010 compared to the previous decades. This can be corroborated by other studies as well that show much more sluggish productivity growth in the last 20 years compared to the years before it.

This is a frustrating comment, filled with hand wavy platitudes about growth for centuries and booming population growth. It completely ignores the temporal component of market valuations.

0: https://vancouver.ca/home-property-development/empty-homes-t...

[wintogreen74]

>> You can point to any instant, and even any decade in time, and point major inaccuracies in the public's collective financial thinking.

Examples: today Halliburton and GE Health both posted numbers that be the market and saw big drops in value, while Spotify missed big time and swung to a loss, yet saw their stock price go up. Everybody points to potential but totally dismisses today's reality.

[FredPret]

The key thing to remember is “market” is simply a collective noun for “investor”.

It doesn’t have to follow any logical law. People can buy or sell at any time, for any reason, and the market price will move along with it.

[red-iron-pine]

At this point the average individual (aka retail investor) is functionally irrelevant for big moves like the one the parent poster made.

Large firms, often leveraging complex, autonomous systems, are the ones pushing around $20MM worth of stocks and moving the markets (or keeping them from moving). Jim the SE III dropping $30k in RSUs isn't doing to do anything except alter Jim's opinion on the capital gains tax.

[sharkweek]

I live in Seattle. There was a house on my street that had been torn down in maybe 2013-2014, that the owner of the lot sat on for a bit (it was one guy). He spent the next five-ish years slowly building a big, new house.

I’d laugh at how long it was taking him on a week-by-week basis while taking my dog on a walk. There it is, the house that will take almost half a decade to complete.

Well he finally does, and he sells the thing for close to two million dollars.

I then go look at comps during the same time period.

Because of his snail’s pace, he ended up probably making an additional 600-700k (or about 100k+ per year) because of how long it took him to build.

Jokes on me I guess!

[cudgy]

He still likely lost money. What if this guy did this process 5 times over the 5 years (build/sell) instead of sitting on a single property, taking his time?

[rcme]

Is the market acting like infinite growth is baked in, or is inflation simply out of control? And I’m not talking about CPI over the last three years. Stocks have been insane over the last decade. Real estate has been insane over the last decade. Neither of which is measured by CPI. So yea… the market is pricing things like the Fed will keep printing money to prop up assets it explicitly ignores in its inflation calculation.

[nemothekid]

>Is the market acting like infinite growth is baked in,

It's this. America has decided that:

1. The most important retirement/wealth vehicle is your home.

2. Home prices must only go up or your wealth will be destroyed.

3. The government should use it's power to uphold (1) and (2), which results in NIMBYism, all the tax breaks you see around mortgages, and of course the 2008 bailouts.

w.r.t stocks I largely think that was a ZIRP phenomenon, but stocks are allowed to correct somewhat.

[bumby]

You forgot the part where people use their home equity as a revolving line of credit, which exacerbates #2.

[red-iron-pine]

aka we got a head start and are now able to leverage that head start even further

[bun_at_work]

The market kinda does have infinite growth baked in. To oversimplify more than a bit: The petrodollar system kind of ensures we export dollars to all countries who need to buy energy on the global market (not all, but a lot). That means the monetary supply has to go up or energy prices will skyrocket. So dollars are printed and the fed + treasury target a growth rate of 2%. Obv things are messed up right now, but that is how the system is designed. Infinite growth at 2% inflation per year.

E: To be clear I'm not claiming this is sustainable, only how the system is designed.

[DSingularity]

It certainly feels like money is going to lose its value eventually. Everyone is becoming wealthy by just clicking buy. When people start using that money, what will happen? Markups from exceed demand — inflation.

[XorNot]

Inflation of what though? Real estate is the only asset on the planet we can't just manufacture more of. iPhones, cars, clothes...all of that is disposable and near infinitely reproducible.

A person can't eat more then a very limited amount of food per day, regardless of their wealth.

So what's going to inflate?

[goawaythrwaway]

Why, the misery of poor folks, of course - as measured against a representative bundle of various non-value-producing traumas (i.e. Rich People Problems, in the common parlance.)

You see, when the "We" you reference in your second sentence - who I will actually refer to as "They" going forward (I hope this is not too presumptuous, if it is please notify me as quickly as you can after your 1st or 2nd eight-hour shift and I will update this) - Anyhow, the issue arises when They are no longer sufficiently motivated to infinitely reproduce these iPhones, cars, clothes, etc. for everyone to consume and dispose of. It should go without saying that this state of affairs is massively destabilizing for both We and They.

As the parent to your comment astutely observes, when "everyone is becoming wealthy by just clicking buy" (note: I will likewise be using the term "everyone" in the usual sense, as shorthand for "everyone I care about or know too well to assume financial standing directly maps to moral standing") then there is simply too much money sloshing around for it to continue flowing within the Banks as intended. It then, to borrow a phrase from esteemed economist Dr. Bonzo, begins trickling down to ever lower segments of the population. Obviously, this is Very Bad; and indeed, if this trickle-down continues it may eventually reach populations far below C-level.

That brings us to our current crisis. In the above context, you may think of the money-printer-go-brr approach of 2020 onward as a sort of Hundred Year Flood. What's worse, this flood was already largely concentrated in the lowest-lying areas it was ever intended to reach. Although We had the foresight to levy protective taxes on these areas, even these levees became overtaxed in the deluge and the usual trickle turned into a torrent. Suddenly, even the poor could afford to purchase some of the things they produced. Needless to say, this caused a dramatic decrease in the Productive Misery supply at exactly the moment when We demanded it most. Enter inflation.

Looking back on this disaster, one thing is clear: Though I'd always considered the phrase far too pessimistic to be true, a rising tide really does lift all boats. In fact, these days the yacht gets stuck in traffic so often, I wonder if a third one is even worth it.

[BeFlatXIII]

Real estate and stocks are both inflated from the 2008 money printing. Why didn't the QE from the '08 crisis cause visible CPI inflation? The money went directly to billionaires and banks who bid up prices on assets that banks and billionaires enjoy: stocks, yachts, and real estate. The C-19 stimulus money went to the pockets of ordinary citizens, who then increased demand for products regular people spend money on, causing inflation readily captured by CPI.

[Xeoncross]

The market is acting very rationally. If you print trillions of dollars out of thin air every year, there is more money and more demand. So everything else goes up in price.

Everything still costs the same relative to the amount of US dollars that exist. Wages just aren't keeping up with printing press.

[bryanlarsen]

Money printing (aka QE) stopped 13 months ago and money shredding (aka QT) started 10 months ago.

[Xeoncross]

Check the charts again, the new lending vehicles to banks just wiped out half the QT that we had gained last year.

Set the chart to a 1yr scale: https://fred.stlouisfed.org/series/WALCL

You'll see our QT was already paltry to begin with compared with the total balance sheet, now we're close to our ATH again.

Prices are the result of years of strong printing (since 2008) ballooning our cash vs asset ratio compared with what it was in the 90's or 00's. It takes time for the economy to react, but we certainly had a bull run decade since the printing started.

In 2018 they started the same slow sell off of assets, but then quickly surpassed it during the 2020 lockdown printing.

[rvba]

Markets dont follow logic because central banks pump incredible amounts of dollars via money creation.

Quantitative easing, 0% interest, massive inflation - are all just facets of the same problem - that central banks dont work for the common people.

Market looks irrational, but it is rational - money is "free" - so zombie companies can exist. Inflation just ruins the low and middle class, but who cares - it is convenient for governments.

Market was artificially pumped by quantitive easing. Also money is not free for normal people, banks earn interest and that interest comes back as inflafion.

Licence to create money out of thin air is like license to steal.

[kristianbrigman]

This is because money is trying to be two things at once - a medium of exchange, and a stable asset - and those are often in conflict.

If I just want to trade my bushel of corn for your chicken, money makes it easier - I exchange my corn for some money, and then I exchange that money for your chicken. I don’t care whether the money is ‘one fricasee’ or ‘ten million gorzebos’ as long as we both agree that’s the number attached to it. You can use something that is a real asset for this, but it actually doesn’t have to have any intrinsic value to be usable for this, as long as everyone agrees to use it.

However, there’s a time element - I can sell my corn, and then keep the money for a while, retaining the power to buy the chicken later. That turns it into a potential asset. During that time, the numbers attached to different items could go up or down - the time element makes arbitrage possible. Even for ‘useless’ assets.

Too much money held as assets can reduce its effectiveness as a medium of exchange - but improving the effectiveness as a medium of exchange can reduce its stability/value as an asset.

Also probably why there is a lot of contention over gold standards etc. - the gold standard improves its value as an asset, while potentially limiting its value as a medium of exchange - so it’s going to depend on which one you prioritize whether you will favor it or not.

[paulddraper]

> Licence to create money out of thin air is like license to steal.

Is the purchasing power of your savings account shrinking 6% a year from inflation, or it is shrinking 6% a year from bank robbers?

Same effect either way.

[vkou]

If I'm sitting on a mountain of corn/a pile of gold/a warehouse full of NVIDIA GTX 3080 cards, and someone else starts growing corn/digging up gold/selling 4080 cards, my savings' purchasing power is going to drop, but it would be disingenuous of me to complain that I'm being robbed.

[paulddraper]

There you are producing something, which is a worthy endeavor.

I think a closer analogy would be spreading a corn disease.

[cudgy]

“Houses can sit empty without tenants for years but they’ll only go up. Companies can be unprofitable for literal decades but they’ll keep finding funding and buyers. Commercial properties can bleed tenant but the prices will only be up.”

This is not sustainable over the long haul and is basically asset holders holding out for better days (e.g. waiting for the Fed to lower interest rates to recreate the frenzy). In the meantime, cash flows and operating profits are going to get hammered until those with the shallowest pockets can no longer keep up the charade, and the fire sales begin.

[Eumenes]

Why would an empty house not go up in value? If anything, if its unused, it'll likely require less upkeep/repairs.

[spaceman_2020]

It simply means that housing is being bought up by people who don't need their investments to return any cash flow.

Which is great if you're a wealthy oil tycoon from UAE or a Chinese billionaire. But not so great if you work in the city and want to buy a house for your family.

[yamtaddle]

Didn't look at a lot of long-term vacant properties during & after the '08 crisis, I take it?

Modern houses aren't meant to survive in most climates, without heating and air conditioning. They grow mold from trapped humidity, and the finishes fall apart from expansion/contraction.

And this is assuming they were properly winterized before being abandoned, and that they don't suffer any damage that allows outright water infiltration (say, wind damage or a tree branch falling and letting water in through the roof or siding) or vandalism.

I've seen some that were starting to have serious problems less than a year after being abandoned. Thousands of dollars of damage already accrued.

[EDIT] Now, keep the heating and AC running at minimal levels and have someone check in on it every few months, then fix any problems that are developing, and that's another matter—but that costs money, and isn't something I've ever seen done with long-term-vacant institution-owned properties.

[bluedino]

Abandonded houses are often stripped of copper, etc and have squatters, vandals, problems from not being maintained or lived in...

[Eumenes]

Abandoned? You know people own two homes and live in them seasonally w/o them being vandalized? Source: have a summer cabin that's never been rack sacked by vandals.

[esafak]

ransacked. Dictionary says it's from Norse: rann (house) + soekja (seek).

[BearOso]

These are usually gated areas where it's mostly huge model homes and they since few live there, outsiders would be be obvious.

[98codes]

If it's unused generally but also kept up, sure. That's generally not the case for empty houses.

[wesapien]

If China didn't control the outflow of Yuan, then real estate everywhere would be much higher than it is because they will just park their wealth there far away from the hands of the CCP.

[fumar]

Does this mark an end for our society's principles? Are we do for a dark age? Are we in it or will there be an enlightenment or renaissance?

[spaceman_2020]

I don’t know, but it’s increasingly frustrating as an average person. Apartments around me keep appreciating in value every year, rents keep going up astronomically even when the houses stay empty.

My income went up, but housing in my area went up nearly 2x. I’m being priced out of areas I’ve lived in forever.

I feel like a social contract has been violated. Everything, from products to housing seems to be targeted at the “luxury” and “premium” segment. It’s like a omnipresent giant middle finger to anyone but the wealthy.

[crooked-v]

Housing prices keep going up in the US because, fundamentally, there's not enough housing and hasn't been enough housing built for decades [1]. In most big cities, this is a self-inflicted problem caused by bad zoning and by planning and permitting processes that can take years and add huge amounts to home prices. (This is a big part of the reason there's so much "luxury" housing; adding a superficial high-end gloss is one of the few ways to disguise the additional bureaucratic markup.)

Unfortunately, a huge number of people like to blame this entirely on evil developers and evil corporations and think that merely adding more regulation on those will make the problem magically go away.

[1]: https://www.cnn.com/2023/03/08/homes/housing-shortage/index....

[bink]

Housing prices are rising dramatically even where populations are declining and land is abundant. It's not as simple as saying there's a housing shortage due to zoning.

[nprateem]

House prices go up because they're now investments. Bring in land value tax and you'll quickly see a reversal.

[pjmorris]

I just went and looked up 'San Francisco empty residences'... it's somewhere between 40,000 and 60,000 depending on where you look. I then looked up 'San Francisco homeless population'... somewhere around 8,000.

I am not convinced of the narrative that there isn't enough housing.

[jimbob45]

I wish this narrative would die. It's probably true that there's not enough housing but it's also true that AirBNB is sucking up many of the vacancies and apartment ownership consolidation is allowing owners to endure vacancies longer than they should be able to. You're simply never going to convince everyone that building more is the answer when there's such low-hanging fruit in front of everyone's eyes that you refuse to acknowledge.

[contingencies]

You have pretty much articulated the feeling of anyone under 50 in Australia.

[OoOOo]

Absolutely agree with this assessment.

[akiselev]

If anyone honestly feels this way, I invite them to read The Republic for Which It Stands [1] by Richard White which is about the post-Civil War era and the Gilded Age. Everything from the political division to the growing income inequality looked a lot like today - worse even! - and the author specifically points out the similarities throughout the book.

This has all happened before, and it will all happen again.

[1] https://www.amazon.com/Republic-Which-Stands-Reconstruction-...

[etothepii]

So say we all!

[cuteboy19]

A zero interest rate phenomenon

[NoboruWataya]

Others have mentioned buybacks, but the broader point is that if a company is consistently profitable, it will eventually pay dividends (or do buybacks). The board, who decide what to do with the company's money, have fiduciary obligations to the shareholders. They can hold cash reserves to cover future liabilities and they can re-invest profits in growing the business, but ultimately when the board cannot identify profitable investment opportunities, that money has to go back to the shareholders.

Also, it is only in insolvent liquidations that shareholder get nothing back. If the company were to wind up while still solvent, the shareholders would get their share of its net assets. (Though I don't think this happens much with public companies.)

[Sohcahtoa82]

> If the company were to wind up while still solvent,

Has this ever happened to a publicly traded company?

[vkou]

Yahoo, essentially, when it disgorged its stake in AliBaba to Yahoo's shareholders.

[dragonwriter]

> So if I don't get dividends, can't vote, and am not entitled to a share of the company's assets

As a stockholder, you are entitled to a share of the remaining assets after debts are paid at dissolution.

Of course, the nature of bankruptcy liquidation is that there tend not to be remaining assets.

[itake]

My understanding is buybacks are better than dividends for tax purposes, because with dividends you pay income tax and buy packs you pay capital gains.

[HDThoreaun]

Dividends pay the exact same tax rate as selling stock which is how you make money from buybacks. The difference is that buybacks allow you to take the income in the future and shift the tax burden timing.

Both dividends and stock selling are normal income tax rate if you've held the stock for less than 6 months and capital gains rate if you've held for more.

[malfist]

Selling stock isn't entirely how you make money from buybacks.

Buybacks inflate the stock price, making what you're holding more valuable, even if you don't sell. More valuable assets are useful for all sorts of things, including leveraging them for other activities, or selling them for capital gains.

[HDThoreaun]

Absolutely can get into all that, buybacks definitely are better for tax purposes, but saying "buybacks are taxed at capital gains rate and dividends are income tax rate" is not correct

[taeric]

For stocks that don't pay dividends, the only way you can make money from them is by selling.

You are right that you can leverage them in all sorts of ways, but that isn't really what anyone means by making money. It is how you drown folks in leveraged debt that they can't pay back later, of course.

[aketchum]

Are you sure about this? I believe you would prefer a share value increase of $1 instead of a dividend of $1, as you are taxed on dividends as income (income tax) but stock appreciation is capital gains (lower tax than income tax). This is in the context of American taxes.

[spokesbeing]

"Qualified dividends" are taxed the same as capital gains. To be qualified mostly depends on a minimum holding time, 60 days for common stock.

https://en.m.wikipedia.org/wiki/Qualified_dividend

[RC_ITR]

You pay tax on the cash now, you choose when to pay tax on the share price increase.

Money has time value.

[nemo44x]

They aren't buying your shares back if you aren't selling them. The buyback makes each share worth more. You don't sell. You have something more valuable than before and now you can borrow money against it. That's the point.

[sbierwagen]

LTCG threshold is one year, not six months.

[Wowfunhappy]

But the question remains, what exactly are you buying, and how is it tied to the actions of the company? This has long confused me as well with regard to non-voting shares.

[aketchum]

you are buying a piece of future cash flows from that company, discounted based on risk of realizing those cash flows

[burnished]

The context was non voting, no dividends shares. So where is the future cash flow? Genuinely also curious.

[boring_twenties]

With qualified dividends, you pay the LTCG rate anyway. The problem is that dividends are taxed twice: the corp pays corporate income tax on that money before it's distributed

[Etheryte]

Stockholders are not supposed to get anything if the company they're holding goes to zero, that's not a bug, that's literally how stocks work.

[mahogany]

This reply (and several others) is focusing on one part of the comment and ignoring the overall point.

The question is: if companies are no longer giving dividends, no longer giving voting rights, and you get nothing if it goes to zero, then what, intrinsically, is the value of a stock tied to? Is it something other than "stock will go up so someone will buy it at a higher price"? How does it differ from, say, Bitcoin?

[RecycledEle]

You are correct.

If we ignore trades between investors, then people buy stock, receive dividends, and one day the company goes out of business. (Nothing lasts forever.) The dividends have to exceed the purchase price (accounting for an acceptable rate of return) to justify the purchase.

Without dividends, stocks are a zero-sum game where someone has to lose a dollar for every dollar someone else gains.

If a stock will never earn dividends, and the company will never buy it back, then it is worthless.

[crooked-v]

> Common stock shareholders usually get nothing if a company goes bankrupt and liquidates.

...what else would you expect to happen? If a company is bankrupt, it pretty much definitionally has zero value beyond whatever its assets sell for, and those will generally go to cover debtors.

[HDThoreaun]

Companies that don't pay dividends generally do buybacks. Almost all public companies are profitable and do either dividends or buybacks.

[RC_ITR]

>So if I don't get dividends, can't vote, and am not entitled to a share of the company's assets, what is the actual value in owning stock? Do I just wait for the share price to go up, sell at the peak, and pass my shares on to the greater fool? That's starting to smell a lot like the worst sort of crypto trading.

If they aren't paying dividends (but are profitable), then profits are either going to the balance sheet or into capital and you literally own those things.

It's also difficult to grasp, but share buybacks have the same net effect as dividends (they primarily exist for tax efficiency).

Oracle is a great example here. They have cut their number of share in half [0] over the past decade, while paying a relatively paltry 1.6% dividend yield. So sure, you're not swimming in cash as an owner, but many investors don't want that, they'll gladly take the effective doubling of their ownership of the balance sheet that they've been given instead.

[0]https://www.macrotrends.net/stocks/charts/ORCL/oracle/shares....

[ubermonkey]

The "non-voting shares" thing is just SUPER bananas to me. Like, you could hold a billion dollars of META shares and have no vote. In what sense is that "ownership?" Why do people go along with it?

>So if I don't get dividends, can't vote, and am not entitled to a share of the company's assets, what is the actual value in owning stock?

EXACTLY.

[nemo44x]

> Common stock shareholders usually get nothing if a company goes bankrupt and liquidates.

That's that whole risk and reward thing. Equity is often the last in line for anything when a company is in trouble. You need to pay employees, vendors, bond holders, other loans, etc first. Pretty much everyone before a share holder sees a dime.

> what is the actual value in owning stock?

They could pay dividends one day but dividends have fallen out of fashion because the taxes on them aren't good. So many share holders don't want dividends but rather for companies to buy back shares, making their shares more valuable.

> Do I just wait for the share price to go up, sell at the peak, and pass my shares on to the greater fool?

If you can do that reliably then you will be the richest person on Earth. There are many great companies worth investing in.

[mech987987]

When a company liquidates, bondholders are paid out before stockholders. This is to prevent moral hazard from companies going deep into debt and running off with the cash by liquidating the company.

[etothepii]

This is not always true and depends on the structure and terms of the bond. For example in the credit suisse takeover several classes of bond were wiped out while some classes of shares were not.

[genghisjahn]

Common share holders almost always get nothing if a company goes bankrupt. That's part of the risk of holding stock. See the section How Assets are Distributed in a Liquidation: https://www.investopedia.com/ask/answers/09/corporate-liquid...

[wintogreen74]

You can buy all the dirty, old fashioned stocks that still pay dividends like oil & gas, banking, integrated grocery, even Microsoft - at least until the activist investors push them to fundamentally change their business models.

[calebcannon]

I think a lot of it is driven by the desire for a product/service to exist, rather than the hard nosed financial decision to “Invest.”The crazy growth of companies like beyond meat and tesla are weird to number crunching investors but retail wants electric cars and not-meat to exist because the individuals think it will improve their quality of life.

You’re completely correct about those financials making no sense though.

[red-iron-pine]

> So if I don't get dividends, can't vote, and am not entitled to a share of the company's assets, what is the actual value in owning stock? Do I just wait for the share price to go up, sell at the peak, and pass my shares on to the greater fool? That's starting to smell a lot like the worst sort of crypto trading.

Basically. Classy gambling at this point.

[blakesley]

> So many companies no longer pay dividends. So many classes of stock are now non-voting shares.

This seems normal to me. (I'm in my late 30s) Dividends aside, you're saying you used to do a lot of voting and now, in 2023, you're not anymore?

[subsubzero]

agree, my thesis on 2023 was for stocks to start trending down, but for some reason there was this strange bump in the stock market and then when SVB collapsed I said yup its finally coming(a healthy correction). But the fed/treasury bailed out SVB's toxic assets(non-FDIC insured) to the detriment of the broader market. I feel like the fed will do anything to prevent even the slightest failure, but bad assets/institutions need to fail. Its analogous to not removing cancerous cells and letting them spread through the body.

[autokad]

exactly. Most stocks are effectively over produced digital collectibles. a stock should only be worth the potential cash flows it gives you in the future. period.

'but I get a share of the assets if it goes bankrupt'. you mean nothing? share holders are last in line behind government, bond holders, other debt holders, preferred shares, and then maybe common stock.

people are in some sort of 'rage' mode in gambling on assets.

[gizmo]

Bed Bath followed the email scammer strategy of making their scam so obvious only the most financially illiterate people could fall for it. Hard to pull of, but once you've got an investor base that's willing to believe anything you can dilute them repeatedly and they'll still believe it's 5D chess.

[BaseballPhysics]

Eh, frankly, I think that does a disservice to the people buying the stock.

Were a bunch of people buying into the meme stock hype? Sure.

Does that make them financially illiterate?

Well, the folks who bought Hertz sure look pretty damn smart in hindsight even though at the time they were being described in similar ways, so... who's to say if they are illiterate or just have a different view of value and risk?

[dragontamer]

You can be right for the wrong reasons. You can be wrong for the right reasons. You can be right for the right reasons, you can be wrong for the wrong reasons.

The problem with being "right for the wrong reasons", is that your logic fails to apply to future situations.

The "wrong reasons" in this case, is the obvious ego-tickling / ha ha the other people were wrong that's obviously intrinsic to the gambling / meme stonk trading culture. I'm sure it feels good when you're right for the wrong reasons, but I don't think it leads to long term success. ("Royal You", not you in particular, if you don't mind).

But yes, it does feel good to be a contrarian and win due to dumb luck. But I'm not sure how many times "Hertz" situations will pop up in the future. I think this ego-tickling / contrarian mindset is at the root of this behavior, at least based on the discussions I have in my social circle / meme stock traders I'm aware of.

-----------

There's also "wrong for the right reasons", which is my preference in general. You generally want to be wrong today, if it means that your logic holds for most future cases.

[jraby3]

A simpler way to say this is you can have a correct bet and a bad outcome and an incorrect bet and a good outcome.

If I were to offer you $1 for heads and $3 for tails and you chose heads and lost, I’d win the bet but it’s still a bad bet.

[lcnPylGDnU4H9OF]

Sounds like I was wrong for the wrong reasons too. (I lose the bet and it was a bad bet.)

[rchaud]

> who's to say if they are illiterate or just have a different view of value and risk?

When their opinions come exclusively from an echo chamber, there's effectively no difference. Visit r/BBBY and you'll find plenty who are ready to hold the stock all the way through BK.

[0x457]

I mean...those people call themselves degenerate gamblers. It's precisely what it is - a gamble. Premium for calls is cheap, so dumping some cash into $1 calls was basically free.

There are some examples that aren't gambles - Movie Pass, you have to be not just financially illiterate, you have to be illiterate to invest in it.

BBBY is probably just Hertz FOMO though.

[jandrese]

Just because a risky behavior works out sometimes doesn't make it any less risky.

[BaseballPhysics]

I never said it wasn't risky.

I'm saying it's unfair to assume it's proof someone is "financially illiterate", i.e. uneducated or stupid.

Educated people can have different assessments of risk.

[dragontamer]

BBBY was publicly in default in December 2022 (and this was announced to the world in January 2023), and their plan to get out of it was to print hundreds-of-millions of shares and sell it to the APES to raise money a-la AMC.

As much as the APEs want to compare this even to Hertz... Hertz wasn't printing hundreds-of-millions of shares in its troubled time in 2020. (They tried to, but unlike today, a judge shut that attempt down).

----------

So on the question of "what if the apes just pump the stock up and everyone makes money?". The "financially literate" counter to that question is rather simple: how can the stock price go up if the board of directors is printing 600,000,000 new shares? (Note: BBBY only had 117-million shares in December).

If the stock price fails to go up, why would the apes keep investing? If the apes fail to invest, how does BBBY get out of its default with JP Morgan/Chase? And here we are today, with the formal bankruptcy being filed. It was an attempt (IMO, an immoral attempt) to get money, but it did raise ~$700 million from the apes. But that's not enough to rescue BBBY.

---------

Now this is where Hertz did well by the way, after the bankruptcy. If you really want to gamble "like people did with Hertz", today is the day, post-bankruptcy filing, that you start sinking your money into this stock. I don't recommend it though.

[itsoktocry]

>I'm saying it's unfair to assume it's proof someone is "financially illiterate", i.e. uneducated or stupid.

Assume, sure. But you could follow along on Twitter or StockTwits and see why many of these people were buying Hertz. That's the beauty of modern times. I certainly didn't see many doing risk analysis, it was mostly "Burn the shorts!".

And, many people bought all the way down from $20 to get an $8 payout.

[steveBK123]

Yes it does.

Just because someone does inevitably win the lottery does not make lottery ticket buying financially literate & savvy.

[BaseballPhysics]

It's ironic that you make that comparison, as a lot of very very financially literate people buy lottery tickets because they know they're taking a risk, they know the probabilities, and they still do it because it's fun.

For the same reason, some of the most brilliant minds out there gamble on games of chance, or engage in sports betting, or other high risk activities.

Just because someone takes a risk that you would not take, doesn't mean they're financially illiterate, and certainly you are not in a place to judge one way or the other.

Edit: And as an aside, I can speak to this with some personal experience, as on a lark I threw a bit of money at GME back in the day. Not a lot! Certainly no more than I could afford to lose (and I assumed going in that I would lose it). It was a rollicking good time as I followed the hype cycle on Reddit and whatnot. And in the end I 5x'd my bet.

I don't for a second believe that was anything but dumb luck. And you won't find me running around finding new meme stocks to chuck money at. But I certainly enjoyed myself!

So does that make me financially illiterate?

[dragontamer]

No. It makes you a gambler.

And gamblers don't usually make money, because they're in it for entertainment rather than making money, saving money, or providing for their families.

Believe it or not, investing is an activity that, under the correct circumstances, leads to the benefit of the investor, the company, and the economy in general. I personally seek this behavior that's beneficial to society in general (and its non-zero sum: I trade liquidity that I have today for the promise of modest future gains). Like 5%/year (aka, the current FFR / risk free rate) to 15%/year on the riskier bets on good years.

People looking for returns much larger than 5% to 15%/year today are gambling. That's just not the speed at which companies grow, so you're betting that other people have undervalued a company, or you're betting on a "Greater fool" swooping in to rescue you. You're not betting on the underlying mechanisms that lead to economic growth.

[BaseballPhysics]

> Believe it or not, investing is an activity that, under the correct circumstances, leads to the benefit of the investor, the company, and the economy in general. I personally seek this behavior that's beneficial to society in general

That sounds very noble.

Of course, the reality is the vast majority of people trading financial instruments do it for one reason: to enrich themselves (or, in this case, to entertain themselves). Everything else is a side effect as a consequence of regulations creating incentives that lead to socially constructive outcomes.

> so you're betting that other people have undervalued a company

That's... kinda the entire point of active trading.

I personally don't believe it. In general I'm an efficient markets guy. But there are a lot of active investors, including mutual funds, hedge funds, etc, that operate exactly on this principle.

[adam_arthur]

They didn't sell nearly enough shares.

They could have probably saved their business, at least in the short term, by selling more. Their shares outstanding barely increased even as the price rocketed unjustifiably higher on meme energy. I'm consistently amazed by the poor management by CFOs of companies not selling shares when their P/E or even P/S multiples are 100x+.

This is 100% free and exploitable money available to businesses, that quite clearly won't last into perpetuity. NVDA should be selling 10%+ of their share count into the market at this price. You can buyback the shares later when the price will, inevitably, and quite obviously materially fall. You could immediately put the money into a MMF yielding 5% rather than the current 1% earnings yield. There's just obvious, no brainer stuff here for many CFOs to take advantage of.

Looks like BBBY share count has declined materially over the past decade, which was quite surprising. Goes to show that buybacks mean nothing for shareholder returns until you sell. And the buyback itself is a disposal of cash on hand (or accrual of debt), so is price-neutral in the immediate term. Who wants to bet that BBBY would rather have the cash right about now?

https://www.macrotrends.net/stocks/charts/BBBY/bed-bath-beyo...

[lbwtaylor]

> They didn't sell nearly enough shares.

This doesn't seem to be right. From Matt Levine:

>On Jan. 20, Bed Bath & Beyond Inc. had about 117.3 million shares of common stock outstanding; the stock closed that day at $3.35 per share. On March 27, it had about 428.1 million shares outstanding, at $0.7881 each. On April 10, it had 558.7 million shares outstanding, at $0.2961 each. Yesterday, April 23, when it filed for bankruptcy, it had 739,056,836 shares outstanding. 1 The stock closed at $0.2935 on Friday.

https://archive.is/PXnpB

Seems like they sold as much as possible, enough to crater the stock, but not save the company.

[adam_arthur]

Yes, they waited until the share price was close to 0 to start selling rather than when it spiked to 20. Note the dates in what you quoted versus their stock chart.

If they had actually sold earlier when the stock was largely mispriced to the upside, they may have been able to turn it around. Good capital management is raising money when you dont need it in preparation for time that you do… not panic selling as your stock is already on the verge of bankruptcy.

My commentary was exactly that. That companies should raise when their stock is fundamentally overvalued. There are hundreds of companies out there that sure wished they had raised in 2021. Many of them are likely to follow in BBBY’s footsteps

Really poor execution by CFOs across the board. I think a combination of being overly optimistic, plus personal incentives against lowering the share price in the short term (Stock based comp, board may be short term oriented and decide to fire you, etc).

[graeme]

Companies will not find unlimited liquidity at given share prices.

[FormerBandmate]

It takes a lot of time to authorize share sales. When you do that it tanks the stock. AMC tried to at $80 and got voted down so had to go through several hoops which caused massive declines.

Elon Musk is one of the only people who's ever made it work, and his sales of Tesla stock are largely responsible for its current success

[adam_arthur]

You can authorize future share sales well ahead so that you're already prepared. Many companies have consistent authorization to sell into the market when they feel timing is right. It's a common way that BDCs and REITs grow. If the stock is trading well above NAV, selling shares is accretive to shareholders. Buybacks above NAV/fair value are dilutive (which clearly was the case with BBBY)

You can also sell in blocks to private acquirers if anybody bites. But the first approach is better if it's a meme situation (no rational buyer would take a block of shares close to market). Clearly there are many companies that could have and likely still can sell large blocks of shares close to market, NVDA being one example.

"A shelf offering allows a company to register its securities with the SEC but then delay putting them on the market for a period of up to three years. This provides some advantages, as the company can time the release of its securities, ideally aligning the issuance with favorable market conditions. Shelf offerings can also help companies save on the registration process, as they do not have to re-register each time that they release new shares."

from Investopedia

Somehow people confused this all along the way and simply equated "buybacks = good". Its about what value you get for the shares you're buying/selling. That's it. Buying back your shares at a 30x+ earnings multiple is going to be a terrible allocation of capital for most companies in the long run

[patrickthebold]

Random thought and I figure there must be a law against this: But what about the opposite, could a company sell off it's assets and do stock buy backs right until it goes bankrupt so that some investors get more $ ahead of the creditors?

[bombcar]

There are various tricks around this area (the Texas Two-step is a favorite) but most of the blatant ones have clawback possibilities.

https://en.wikipedia.org/wiki/Texas_two-step_bankruptcy

[silisili]

I don't see how this isn't illegal, or more pointedly, why everyone isn't doing it if it is legal? So you can just write off liabilities into a new company? Why wouldn't every company do this every year?

[0x457]

Well, it is illegal to do anything ahead of bankruptcy that would have the effect of preferring shareholders to creditors.

You can't just spin off your debt into a new company and declare bankruptcy as you wish, courts are involved, things must be approved. Clawback exists.

[NoboruWataya]

In general, doing anything in anticipation of bankruptcy that would have the effect of preferring shareholders over creditors is illegal. The way that particular rule is described varies from jurisdiction to jurisdiction and there have been many attempts to get around it, but that is the general principle.

[gamblor956]

It's been tried occasionally a few times over the past century. Most attempts at sham bankruptcies have not succeeded, and the few that went through are still under litigation (see the Johnson and Johnson case from a few years ago).

Bankruptcy law is administrative law, so courts are not limited to the letter of the law when assessing bankruptcy proposals; they are allowed to look at the intent of the la as well.

[criddell]

I've thought about that before.

Would it be technically possible for a company to buy all of its shares back so that there are no owners? The company would be self-owned.

[chimeracoder]

> Would it be technically possible for a company to buy all of its shares back so that there are no owners? The company would be self-owned.

No, because there's a statutory minimum number of shareholders (which varies by country but is always greater than zero).

But even if this weren't the case, it wouldn't be as weird as it sounds. In most states, nonprofits cannot issue stock, but they still exist as corporate entities.

The directors ultimately control the company. Shareholders are secondary: irrelevant, except insofar as they can vote out the board of directors.

[kube-system]

I have a hard time feeling sorry for any retail investors who made the decision to buy BBBY on their own.

[fullshark]

What was the premise behind buying a stock for a company headed for bankruptcy?

[dragontamer]

Meme stock traders thought they had another Hertz coming.

Hertz was going into bankruptcy in 2020, as the pandemic wrecked their finances. But then in 2021, in the middle of the bankruptcy, it turned out that their fleet of millions of used cars skyrocketed in price, saving the company from bankruptcy. Some other company purchased Hertz before the bankruptcy finished and Hertz shareholders then reaped the rewards as the stock climbed from pennies into $7.

[vkou]

Through a combination of divination by star signs and chicken entrails, reddit determined that the bankruptcy is fake, the business is actually amazing, and the only reason everyone thinks the company is doomed is because it is being shorted by bad people.

If they just buy and 'hodl', the shooters will get squeezed, and all the holders will make infinity dollars.

After buying mountains of stock, they've come up with insane theories for why this isn't a real bankruptcy, why some angel is going to come in at the eleventh hour to rescue their BBBY and how they will all get 1:1 shares in the angel's firm.

It's flat earth/rapture insanity, except these people are financially invested into their delusions.

[wwweston]

> the only reason everyone thinks the company is doomed is because it is being shorted by bad people. > If they just buy and 'hodl', the shooters will get squeezed, and all the holders will make infinity dollars.

If there isn't already social sciences literature on The Unreasonable Effectiveness of Enemy Narratives, there should be, and I'd like to read highlights that exist.

[reducesuffering]

These people are being propagandized and any dissenting opinion is instantaneously removed by moderation through keyword filters or something. Echo chamber subreddits with a certain moderation is real life brainwashing.

[pram]

Profiting from a short squeeze. They basically load up on the shit stock like lottery tickets because they believe the price will eventually skyrocket. This is why they’re willing to delude themselves for months and years.

[stusmall]

There are two big ones.

1) There is a lot of volatility in this period. There is money to be made at buying in and dumping it at a small, local spike. A lot of the money is made off others trying the same game.

2) Some of these meme stock investors have been sold a bill of goods. Go check reddit.com/r/bbby to see what I mean. Some of them believe this is a larger conflict between good and evil. There is a belief that will be some eleventh hour deus ex machina event where Ryan Cohen will reveal this is all part of his long term scheme to defeat Citadel or whatever. The shifting narratives are insane, hard to follow and even harder to explain. It's basically financial qanon and it's really sad to see. The execs of some of these meme stock companies know exactly what is happening and are very happy to release unethical, vague statements to feed into the fantasy. But the apes are still buying in to prep for this apocalyptic event.

[xsmasher]

"Waiting for NESARA" is a real eye opener about how people can latch onto crazy ideas and make it part of their identity. I think about it whenever r/bbby or r/superstonk conspiracy theories escape their subs and make the main page.

[reducesuffering]

Ok wth. Attempting to post on reddit.com/r/bbby an innocuous message about how BBBY was burning $1 billion a year, they are being duped by an echo chamber, and better financial advice is on bogleheads.org receives an instantaneous removal by mods.

What have we done with technology that people are getting sucked into these disastrous echo chamber filter bubbles, where any dissenting opinion is blacklisted, turning people into financial ruin and QAnon brainwashing?

[d136o]

I wonder how much of it is explained by all the company retirement plans that are set to auto invest via an index fund.

They says it’s retail meme stock buyers… but what if it’s everyone who doesn’t have time to look at things and these publicly traded companies are now just selling into those reliable biweekly/monthly retirement account contributions.

[andylei]

BBBY is not in any major indices

[dna_polymerase]

Another relevant piece by Matt Levine is about Hertz, who were in a similar situation in 2020 iirc: https://www.bloomberg.com/news/newsletters/2021-05-12/money-...

[morkalork]

Bed Bath and Beyond the Pale

[beiller]

Bed Bloodbath and Beyond

[myhf]

Bye Bye, Baby

[fknorangesite]

This the new Doom DLC?

[paulpauper]

Bed Bath continued to sell hundreds of millions of shares while they were preparing for bankruptcy and retail investors (or meme stock investors) continued to buy them.

That is how markets work. Buyer must match seller. Meme stock investors are only a small % of buyers. Others are funds.

[dilyevsky]

I think you’re wrongly assuming that the point of meme stock “investing” is to make money - quite the opposite actually

[BeFlatXIII]

That's why I call it the stock market casino. Don't invest what you can't afford to lose.

[cush]

What's Matt Levine's take?

[exsf0859]

He's covered the decline of BBBY many times in his newsletter, explaining the financial details and shaking his head each time.

His Monday April 24th, 2023 newsletter, titled "Bed Bath Moves Beyond", covers the situation once again. It ends:

"Bed Bath saw that its retail shareholders wanted to throw their money away, and that its sophisticated lenders wanted to get their money back, and realized that there was a trade to be done that would make everyone, temporarily, happy. So it did the trade. It’s amazing. The lawsuits are gonna be great."

[mrguyorama]

>The lawsuits are gonna be great.

Why can you be sued because idiots convinced themselves you were a good buy while you were showing everyone your terrible finances?

[vkou]

Because you aren't allowed to sell stock in advance of your bankruptcy filing.

BBBY did this in a roundabout way, by signing a deal with HBC, where HBC sells BBBY stock in exchange for cash...

[justincormack]

Everything is securities fraud, as Levine likes to say.

[Sniffnoy]

Could you link it, instead of just quoting it?

[bonzini]

Probably https://www.bloomberg.com/opinion/articles/2023-03-30/bed-ba...

[toomuchtodo]

https://archive.is/svqGg

[Sniffnoy]

> As usual Matt Levine's take on this is a good read.

Link?

[polygamous_bat]

He regularly writes a column on Bloomberg called Money Stuff, you can see a few examples of him talking about BBBY here:

https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...

[Sniffnoy]

Sure, but I was hoping that the commenter above would link the particular piece they had in mind rather than just referring to it.

[marksmith2996]

The confusing thing is that they waited until the stock was under a dollar to do an offering. Had they done at $20 just like 6 months ago they probably could have paid their debts.

[bookofjoe]

>I assume Bed Bath did all the paperwork that is necessary (like calling out risks, that the raised capital will go to creditors first, etc) for such a stock sale.

I'm not clear on why your next sentence is:

>But it is clear they were doing it out of bad-faith to the new investors.

Where is the "bad-faith" in caveat emptor?

[bombcar]

You know those Prop 65 warnings you see on everything? It's the difference between a company sticking it on everything "just in case" and a company with the CancerTron-9000™ rebranding as "edible low-fat sweets" with that label on it.

Every single filing with the SEC contains language that is basically 'holy shit we could go bankrupt tomorrow because billions of reasons' - that's different from "we know we're going down, but we can fleece people on the way down" - though it will be hard to prove criminally in a court for BBB and GameStop, likely.

[Tyrek]

BBBY has issued multiple warnings of bankruptcy, far beyond the disclosures 'standard SEC language' that other (healthier) companies file on a regular basis.

[cratermoon]

My favorite of the moment is 'gluten free'. Seen on things that physically cannot have gluten in them, unless it's contaminated somehow.

[menage]

But cross-contamination in a shared production facility can happen fairly easily (and is important for folks who are sensitive to a few parts-per-million of gluten), hence why lots of packets have that warning in the small print. An obvious "gluten-free" label means that the producer is asserting that this cross-contamination hasn't occurred and you don't have to search the small print.

[larkost]

From what I understand gluten intolerance (including Celiac disease) is not at all like allergies where even a small amount of cross contamination can be harmful (or even deadly). Gluten intolerance really needs a solid amount (which many foods provide) to trigger problems, and the worry is really the long-term damage that can be done.

So I think that the "gluten-free" labels on things that obviously would not have gluten in them (e.g.: bottled water) is absolutely about advertisement to people who have been trained to think that "gluten-free" is always a good thing.

[menage]

Celiac disease and Non-Celiac Gluten Sensitivity are very different beasts in terms of their effects. The latter is more likely to triggered in the presence of (as you say) non-trivial amounts of gluten; Celiac disease is an auto-immune disease that, while not normally at the level of anaphylactic shock, can have very unpleasant effects in tiny amounts.

And even within Celiac disease there are a lot of variations. My mother has been diagnosed as Celiac for 50 years (back before most doctors had heard of it, and she almost died from malnutrition pre-diagnosis). She obviously avoids anything that has any mention of wheat, or has been cooked in the same oil as glutenous food; she generally avoids anything that mentions "possible cross-contamination" on the label but doesn't have to be a total stickler. I don't think she's had a serious attack in many years. A friend of mine was diagnosed as Celiac maybe 10 years ago, and is incredibly sensitive - despite his best efforts he seems to end up with horrible symptoms every couple of months or so just through tiny amounts of contamination.

The FDA limit for claiming something is "gluten-free" is 20 ppm; I believe that level exists partly because it's very hard to detect anything less than that anyway, but it also fits in well with what most Celiac sufferers can tolerate.

[cratermoon]

That's true, and I made a conscious decision not to mention cross-contamination, knowing that the hn community would fill in the gaps.

The short answer is that no, the label gluten free alone does not say anything about cross-contamination.

[garyfirestorm]

Yes that’s because they could share same production lines where other products containing gluten could cross contaminate.

[bombcar]

Have they changed the rules? Because I've seen "gluten-free" corn chips that also have the standard boilerplate about how they may have been packaged on equipment that also processes tree nuts, wheat, etc.

[hef19898]

It started with vegan and then lactose free. But hey, free marketing for a ton products, right?

[cratermoon]

Way back in the day, it was "sugar free". There was much less shady labelling before the Reagan era, so it wasn't common, but there were a few things so marketed even though they had never had sugar before. Today I usually only see "no added sugars".

[slaw]

I remember times when everything was cholesterol free. I even started joking I am buying cholesterol free gasoline.

[zo1]

I've seen "vegan" dishwasher soap, too.

[steveklabnik]

In some contexts, vegan and cruelty free blend together; they probably were trying to signal that they do no animal testing while making the product.

[stametseater]

A lot of soap is made out of animal fat. Less these days than before, and I doubt any dishwasher soap is, but I suppose you could.