Bye Bye Buy Back Binge?

I have been DEAD WRONG about a stock market pull-back for three years now!

The culprit has been share buy-backs - companies going into the stock market to buy back their shares, and by so doing, pump their share prices.  

While this has been happening, officers and directors of these same companies have been selling their shares at a rate unknown in the last 20 years. I have noted in this space before that it should be illegal for these people to arrange for their companies to buy back shares while at the same time they are selling the shares that they own! 

The response to my rant - which is a widely held view - has been that in buying back shares, companies pump their share prices, and small investors reap a reward.  

This is true, to a degree, but these are "real" gains only if those same shareholders know that the buy backs will end, so they know to sell at the height of the artificial stimulus to the share price.  

Of course, no small shareholder knows this - but the officers and directors of these companies who arrange for the share buy-backs do have this information.  This is why it should be illegal for these people to sell their shares while their companies are engaged in share buy-backs - to keep them from launching buy-backs so that they can reap illicit gains by selling into an artificial price bubble of their own making.

But I digress!

Small investors and institutions have not been the major drivers behind the massive appreciation in share prices in the past few years.  Starting with the Trump tax cuts in 2018, companies have bought trillions of dollars worth of their own shares, and this has pumped the market.

Many people wonder when the recent massive appreciation in stock prices will end?  The answer is simple...

...when the buy-back frenzy abates, the market will deflate!

Look here...

https://www.zerohedge.com/markets/institutions-retail-and-algos-are-now-all-just-buybacks-tumble

This is a kind of crazy conspiracy-like site, but they do very good economic and market analysis. 

The key quote...

..."...in the grand scheme of things, and on a rolling 3 month basis, stock buybacks are a far cry from where there were just two years ago, and fading fast to levels not seen since before the Trump tax reform which unleashed a $1.5 trillion buyback bonanza."

I am STILL short...due your own due diligence!