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Posted by Ed 15 days ago
What Would Stocks Do in “a World Without Buybacks,” Goldman Asks


Companies buying back their own shares has “consistently been the largest source of US equity demand.” Without them, “demand for shares would fall dramatically.”

Too painful to even imagine.


Goldman Sachs asked a nerve-racking question and came up with an equally nerve-racking answer: What would happen to stocks “in a world without buybacks.” Because buybacks are a huge deal.

In the fourth quarter 2018, share repurchases soared 62.8% from a year earlier to a record $223 billion, beating the prior quarterly record set in the third quarter last year, of $204 billion, according to S&P Dow Jones Indices on March 25.


It was the fourth quarterly record in a row, the longest such streak in the 20 years of the data. For the whole year 2018, share buybacks soared 55% year-over-year to a record $806 billion, beating the prior record of $589 billion set in 2007 by a blistering 37%!


https://wolfstreet.com/wp-content/uploads/2019/04/US-share-buybacks-2018-annual.png


https://wolfstreet.com/2019/04/08/what-would-stocks-do-in-a-world-without-buybacks-goldman-asks/

COMMENTS

Ed 15 days ago
The record buybacks in Q4 came even as stock prices declined on average 5.3%, according to S&P Down Jones Indices. On some bad days during the quarter, corporations were about the only ones left buying their shares.

For the year 2018, these were the top super-duper buyback queens:

Apple: $74.2 billion
Oracle: $29.3 billion
Wells Fargo $21.0 billion
Microsoft: $16.3 billion
Merck: $9.1 billion


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