| Ripple Effect — May 12, 2025
With trade deals lighting a fire under the stock market, corporate America is also bringing out some more fuel for the flames.
Corporate buybacks are on the rise – to all-time highs. In the past three months alone, companies have announced hundreds of billions of dollars in commitments to buy their own shares.  Companies have plenty of options for what they do with their cash. By engaging in share buybacks, they’re effectively saying their own shares are the best game in town.
In reality, that’s rarely the case. A wise company would only buy back shares when they’re an extreme value.
As Andrew notes: Today, share buybacks usually do two things. They increase earnings per share by reducing the total number of shares – not increasing earnings. And they usually help to offset the shares granted to executives. Neither of those is real growth in the underlying business.
Given this shell game, it’s clear that most companies buying back shares are signaling that they don’t know how to employ their cash better.
Can investors get good returns with companies buying back shares? Absolutely. But if it’s hollowing out the balance sheet, it’s creating riskier conditions as share prices rise higher.
Until that crisis hits, traders see buybacks as bullish.
-Addison P.S. As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)
How did we get here? Find out in these riveting reads: Demise of the Dollar, Financial Reckoning Day, and Empire of Debt — all three books are now available in their third post-pandemic editions. You might enjoy one or all three. 
(Or… simply pre-order Empire of Debt: We Came, We Saw, We Borrowed, now available at Amazon and Barnes & Noble or if you prefer one of these sites: Bookshop.org, Books-A-Million or Target.)
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