The Strength Explained

An important source of the strength might be stock buyback activity. I recently read that buyback activity is running at a pace of over $300 billion for the year. As a percentage of market cap it is a very large number. It does not hurt that there has been little supply in the past few weeks as IPOs and secondary offerings have ground to a halt.

As the market turns up we should see a resumption in IPOs and secondaries. As the economy turns down we should see buyback activity slow. But as of now this dynamic is a positive for the market.

1 comment:

Anonymous said...

Have to love American capitalism. Worker wages as percent of profits already at all time lows yet plenty of money left to reward stakeholders.