{"id":45204,"date":"2019-04-09T09:41:09","date_gmt":"2019-04-09T14:41:09","guid":{"rendered":"https:\/\/olduvai.ca\/?p=45204"},"modified":"2019-04-09T09:41:13","modified_gmt":"2019-04-09T14:41:13","slug":"what-would-stocks-do-in-a-world-without-buybacks-goldman-asks","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=45204","title":{"rendered":"What Would Stocks Do in \u201ca World Without Buybacks,\u201d Goldman Asks"},"content":{"rendered":"\n

What Would Stocks Do in \u201ca World Without Buybacks,\u201d Goldman Asks <\/a><\/h3>\n\n\n\n

Companies buying back their own shares has \u201cconsistently been the largest source of US equity demand.\u201d Without them, \u201cdemand for shares would fall dramatically.\u201d Too painful to even imagine.<\/strong><\/p>\n\n\n\n

Goldman Sachs asked a nerve-racking question and came up with an equally nerve-racking answer: What would happen to stocks \u201cin a world without buybacks.\u201d Because buybacks are a huge deal.<\/p>\n\n\n\n

In the fourth quarter 2018, share repurchases soared 62.8% from a year earlier to a record $223 billion, beating the prior quarterly record set in the third quarter last year, of $204 billion, according to S&P Dow Jones Indices<\/a> on March 25. It was the fourth quarterly record in a row, the longest such streak in the 20 years of the data. For the whole year 2018, share buybacks soared 55% year-over-year to a record $806 billion, beating the prior record of $589 billion set in 2007 by a blistering 37%!<\/p>\n\n\n\n

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Share buybacks had already peaked in 2015 and ticked down in 2016 and 2017. Then the tax reform act became effective on January 1, 2018, and share buybacks skyrocketed.<\/p>\n\n\n\n