One of the really worrying parts of this year’s stock market is that buybacks are booming to new records, yet share prices remain flat. US companies are on pace to buy back $800 bn of stock this year, a figure which would even eclipse 2007’s bonanza. But worryingly, 57% of the more than 350 component companies that have bought shares back this year are trailing the S&P 500’s return. That is the highest share to fall short of the index since the 2008 Crisis.
FINSUM: Aside from the worries about share prices not responding, the other concerning factor is that companies are buying their shares back at very high prices, which seems like it might portend the end of the bull market.