Investors are always looking for the next big event that will send stocks either soaring or tanking… And over the next few months and years, I expect corporate stock buybacks to be the next big, bullish tidal wave to hit Wall Street.
What is a corporate stock buyback?
In the simplest terms, it’s a company buying back its own stock, which then means there are less shares on the open market. This, in turn, means the ownership stake of each investor increases, so your shares are more valuable. Simple enough, right?
And since 2009, corporate stock buybacks have taken off.
Since 2009, companies have been buying back millions and millions of dollars of their own shares — but that doesn’t mean the stock price will go higher. It doesn’t mean the broader market will go higher, either.
All it means is the company is buying back its own shares. In addition to making the shares left outstanding more valuable to shareholders, it also makes the valuation of the company more attractive.
Back to the chart above…
Corporate stock buybacks exploded from 2017 into 2018 and 2019, and then cratered in the COVID-19 pandemic that pretty much shut everything down for at least some time. Companies had no idea what was going to happen, so corporate stock buybacks came to a halt because, just like people, they wanted to hoard all of their cash.
But as we began to see the light at the end of the tunnel, corporate stock buybacks started ramping up once again. And I see big things ahead…
Check out my short video and let’s discuss just how big of a bullish move I see corporate stock buybacks becoming, and what that means for your shares.
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