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Corporate Equity Bid May Hit $1 Trillion In 2025
Who's going to buy the stocks?
Or, put differently, who's going to buy stakes in the companies?
The answer: The companies themselves.
Buybacks are a kind of perpetual topic du jour among market participants and they're a political piñata on Capitol Hill. But for all the attention, the following simple reality remains under-appreciated in my view: The largest source of demand for US equities is the corporate bid.
That's the case perennially -- with some notable recent exceptions -- and accor
I hate that companies whose stock I own are giving my money back so the managers get richer, buy more watches and houses. Buybacks are a fraud.
As the audit partner at an international audit agency for several publicly held corporations back in the 1990’s (I was ahead of my time- and with the birth of each of my 3 children, I kept cutting back on work responsibilities and also worked an increasing percentage of time from home— until we had enough money that I quit), I remember the moment it struck me that buybacks (which reduce the denominator of the EPS calculation), were absolutely the easiest way to increase EPS- even when overall earnings weren’t growing/showing minimal growth.
Throwing money at something without “rolling up one’s shirt sleeves” to do the hard work to make improvements- whether that is stock buybacks or the US government throwing more and more money at education and getting worse and worse results, is something I find very difficult to accept as “a good idea”.
By the way, I occasionally wish I had figured out how to keep working part time (because it was fun), but I have never regretted staying home to raise my children- that was really the most wonderful part of my life (so far).