Posted on 04/26/2016 4:11:28 AM PDT by expat_panama
Most people assume what has kept the market afloat this year after sinking 11% at the start of the year was a mixture of better news out of China, oil prices stabilizing, and indications that the Fed won’t raise rates as much as thought. But the real thing bouying the market could be something else: Stock buybacks.
“Corporate repurchases are the main source of net demand for US stocks,” a team of Goldman Sachs analysts led by David Kostin noted in report out on Friday. Demand stemming from stock buybacks will help push up share prices—boosting the S&P 500 to a flat return of 2100 by the end of 2016 as the markets contend with weak growth and a messy earnings outlook, according to the Goldman analysts.
Stock buybacks, in which companies buy back their own stocks...
...price-to-earnings levels have escalated, investors need to review the data, and differentiate between the two, determining the proper multiple to pay for growth (via sales, cost cuttings, and efficiencies) and the proper level for buyback growth,” Silverblatt wrote.
The stock buybacks come at a time when major investors including individuals, foreign investors, and pension funds have been selling off their shares, according to a note from Goldman Sachs, amid market volatility and weak oil prices. The S&P 500 however has gained around 2% year to date.
Both Apple AAPL -0.57% And GE GE -0.26% announced multiyear $50 billion buyback programs in 2015, of which there’s about 60% of 93% to complete respectively, while Walmart Stores WMT 1.09% authorized a $20 billion buyback program, of which there still 88% left to complete. That leaves about $210 billion in unused share buybacks for the future, Goldman Sachs reported.
(Excerpt) Read more at fortune.com ...
I believe the stock market’s rise is inversely proportional to the number of Americans employed by the listed companies; companies’ stocks soar when layoffs are announced, as they shed the costs of American workers.
The rising stock market, which politicians point to as a symbol of our financial health, spells financial doom for Americans. Firms are employing and selling goods to foreigners at this point; we aren’t even in the equation anymore.
It does not really matter what keeps the market up or makes it go down. Facts I’ve realized over the years are:
1. The market will go down. There’s nothing I can do to change it. It does not pay to worry about it.
2. The market will recover. My money will also be recovered if I have invested wisely.
Because I know the markets, like the weather & climate, are cyclical, the article nor any like it is simply not worth reading.
They can make a lot of money for themselves that way.
That's good isn't it? I mean, you work hard to figure out what folks need, you get it and sell it in the market, you get rich. What's not to like?
They can STEAL a lot of money that way.
Really, for the average investor, that’s the healthiest way to look at it. Just don’t jump in at the top and bail at the bottom.
--and the evil exploiting oligarchy needs to be destroyed so we can have a worker's paradise?
Actually there really is a connection between stock prices and employment. People put money into companies. The companies use the money to hire employees so they can turn profits and pay dividends to the investors. When econ outlook looks bad folks sell their stocks right away and layoffs begin. It's so predictable that most folks say for measuring econ activity stock prices are a leading indicator and payrolls are a lagging indicator.
From whom? The stock value goes up. The sellers get the price they want. Who looses?
The Shock Market is a balloon ready to pop. Gambling is a dangerous sport.
That's not only bad investing, it's bad merchandising. A good trader knows that the customer's the boss. If the trading floor's screaming for new stocks you sell them stocks and pile up cash. When they're crying for cash for their stocks you oblige by meeting the need.
Money is cheap. It is a depreciating asset in a money printing environment. A solid company is wise to borrow today to buy back it’s stock and reissue stock in the future at a much higher price after an inflationary period, paying back past, depreciated debt with future, hopefully more sound currency.
From whom?
This is exactly the loony left-wing point of view, that the only way to get rich is by taking money from the poor. In real life we know that the poor don't have any money and that the best way to get rich is to go to where rich people are an hang around.
It's why folks all over the world work to move to the U.S., they want to live here and it's gotten out of hand so bad that we're even building a wall...
The “Stock Market” is not indicative of the economy. Hell, the “Stock Market” isn’t even a market anymore, more of a casino.
I was at a recent dinner with MFC from Boston and they had some interesting things to say. He said all the indicators they look at our now green, nothing is in the red. Take a look at the manufacturing numbers as an example. He said this is the one of the most hated bull market in history, he had a lot of really bad things to say about CNBC and Zero Hedge. I’m staying moderately aggressive.
They're not providing any service, they're temporarily manipulating the stock price for personal gain.
After they sell off their options and the price falls the losers are all the chumps w/ 401Ks and annuities.
So what if your life savings takes a 30% hit, it's all good.
In the late '70s farmers in these parts were told the same thing. Borrow while inflation is high, and pay the money back with inflated dollars. It will only cost you a couple percent in the long run, despite the high interest rates. SO some replaced aging equipment with new top of the line stuff (on the several square mile wheat farms, that sort of equipment even then would cost a half million to a million dollars). Then the commodities market crashed, about the same time oil prices tanked, and they couldn't even go roughnecking to save the farm. It was pretty grim for some who lost everything.
Well there is the rub. “Solid company” means more than just thinking you are a solid company. In the end, the principal must be repaid, depreciated or not. Good companies will have no trouble issuing stock, or floating bonds in the future, assuming we aren’t in a full blown depression. It may not matter either way, if we are.
The “Stock Market” is not indicative of the economy. Hell, the “Stock Market” isn’t even a market anymore, more of a casino.
https://mises.org/library/vampire-economy
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