For nothing can seem foul to those that win.
William Shakespeare


Over the course of the years, we have repeatedly stated (though probably not as much as many would like us to do) that companies use share buybacks to manipulate earnings. In the past, this gambit was not as prevalent as it is today. Currently, companies borrow money in contrast to using the cash they already have to repurchase their shares and use this modern form of alchemy to turn losses into profits or make moderate profits appear to be spectacular in nature. This bull has yet another bullock’s reason to run higher. We are now in the paradigm of lies and deceit. What thrives in such conditions? The truth; come on you know better than that. The answer is BS, with a capital B. The main thing driving this market higher is pure BS and BS is based on what, alternate reality. This is something the masses do not want to fathom or refuse to fathom. Given that, individuals have an innate capacity to conjure incredible amounts of BS, the driving force behind this market is not going to run out anytime soon. 

Last year was to put it mildly a colossal year in terms of share buy backs, with corporations deploying roughly $540 billion (yes, that's billion of dollars) to repurchase their shares. Now why in the hell would they do this? Well, money is cheap and executive’s compensation is tied to share performance. As we are in the age of lies and deception, the method used is of no consequence, only the result matters. Therefore, whatever lie has to be told is told in order to give the impression all is well. 

1) Last year was a massive year for share buybacks; as we stated $540 billion was used for this purpose.
2) $141 billion in buybacks were authorized in April of this year setting yet another record
3) For 2015, the sums are even more interesting. We are not even half way through the year, and over 400 billion dollars has already been earmarked for share buybacks. Imagine how much will be spent by the end of this year. Since 2001, only the companies in the S&P 500 have spent over $3.1 trillion on buybacks. 

Does the program work? You bet your bottom dollar it does. Illinois Tool Works (NYSE: ITW) used buybacks to…

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