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Aggregate Buyback Activity a Useful Stock Market Indicator?

| | Posted in: Buybacks-Secondaries

A reader noted and asked: “Today’s issue of USA Today has a story about a big drop off in company stock buybacks. Any idea what that has predicted in the past, if anything?”

See “The Stock Supply Cycle”: “Results appear to indicate that firm executives are not especially good timers of the aggregate stock market.”

Company-by-company studies generally (not universally) indicate that corporate managers probably have some ability to time their own stocks.

A principal advocate of aggregate issuance/buyback activity (net change in equity trading float) as a broad stock market indicator is TrimTabs Investment Research/Charles Biderman (see “Charles Biderman, Going with the Flow”). Buybacks represent a part of the change in float.

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