The following chart from David Stockman shows that the money spent by companies to buy back shares increases as the S&P goes higher. There's no presumed cause and effect relationship, but rather a correlation between higher stock prices (S&P) and greater amounts of money being spent on buybacks. The scales are different, but, on both y-axes, the dollars and the S&P levels more than double, slightly. If corporations bought the same number of shares each year, and the price of shares (on average) doubled, you would expect the amount of money going into buybacks to approximately double as well. So is this chart saying anything more than as share prices rise, the cost of buying back shares goes up too, and the companies buying back shares are continuing to buy back a similar number of shares, even at higher prices?
Chart Of The Day: The Perfect Correlation——Stock Buybacks And The S&P 500 Since 2010
Courtesy of David Stockman
