The retail investor is no longer needed in market. We’ve got machines running things and with the increase in margins, corporations have enough money to buy back their shares. By reducing share count, their profits increase; hence creating a ripple effect that is both repeatable and self-fulfilling.
Goldman’s resident bear-shitter, David Kostin, highlights the immense amount of buybacks taking place in 2018. Marvel at it.
“Corporate repurchases remain the largest source of demand for shares,” wrote David Kostin, chief U.S. equity strategist at Goldman.
Kostin also noted that the year already has seen a wealth of buyback announcements, with companies authorizing $754 billion worth. History shows that there’s typically an 85 percent follow-through rate, so that would add up to $640.9 billion worth with 20 percent of S&P 500 companies yet to report second-quarter earnings.
Moreover, technology has accounted for 40 percent of those authorizations. That could be critical in the days ahead, as tech companies have provided the most market volatility this summer. Netflix and Facebook have been two of the shakier stocks as both face challenges in terms of users and public perception.
“Significant potential demand remains for shares as firms complete their existing programs,” Kostin said. “Buybacks represent the critical source of demand for shares given most other ownership categories are net sellers of stocks (households, mutual funds, pension funds).”
There’s nothing you can do to stop it. Markets have no choice but to trade higher, in spite of trade wars, Trump, demotards, anything.
The time of the bull is now. Le Fly stepped in and bought 7 new stocks today, all of which will be revealed soon.
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