Share buybacks are at a record level in the US and are also becoming increasingly popular in Germany. Companies are buying back their own shares like crazy. But does this protect against price losses in a bear market?
Share buybacks in the S&P 500 at record levelsCurrently, the S&P 500 actually contains slightly more than 500 stocks. But it's not because of the higher number of companies that share buybacks are at record levels. They have been rising for years. From October 2021 to the end of September 2022 alone, $982 billion worth of treasury shares were repurchased, according to calculations by analysts at S&P Dow Jones. In the same period last year, the amount was $881 billion. At the top of the list is Apple, which alone invested $88 billion in buybacks. Google's parent company Alphabet follows directly behind with $60 billion. Share buybacks are also becoming increasingly popular in Germany. Linde, for example, which will leave the DAX for US, is in first place with 10 billion euros. It is followed by Siemens and BASF with 3 billion euros each. Mercedes, which recently announced a buyback program of 4 billion euros despite a weak outlook, will be in between. Their program is set to start in March.
Sense and nonsense of share buyback programsThe logic behind buybacks is as simple as it is compelling. The companies reduce the supply of shares and the profits and dividends are then ...
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