A common theme in rationalizing the rise of stocks prices from the low in 2009 to the current level of 2019 has been to say that company buybacks, the buying back of their own shares which artificially boost per share earnings and therefore the share price in subsequent earnings announcements, is the reason.
Although we’re not at the end of the decade, from 2010 to 2019, we have reviewed the number of New York Times articles on the topic of “buyback” and “stock” and compared it to prior decades.
On a relative basis, the period from 2010 to 2019 is a long way off from approaching the next highest decade of the 1980’s.
What does the data suggest? First, buybacks have had relatively little impact on the market’s rise since 2010. Additionally, at the current level, when/if buybacks exceed prior highs the stock market could be significantly above 27,000 on the Dow Jones Industrial Average.
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