One thing that happens when stocks go into bear markets and the economy heads south is that practices that were overlooked when rising markets were lifting all boats get intense scrutiny. If the current downtrend continues, count on Congressional hearings on share buybacks, especially those funded with debt. From Wolf Richter at wolfstreet.com:
The vengeance of share buybacks: buyback queen Apple plunges.
In the third quarter, share buybacks by S&P 500 companies totaled $203.8 billion, according to S&P Dow Jones Indices today. These are actual buybacks, not hyperventilated announcements of possible future share buybacks:
- Share buybacks in Q3 jumped 57.7% from a year earlier.
- This was the third quarter in a row of record share buybacks.
- For the first three quarters this year, buybacks totaled a mind-bending $583 billion.
- This $583 billion was up 34% from the same period in 2017.
- This $583 billion was within a hair of beating the full-year all-time record of $589 billion set in 2007 before it all collapsed.
- Since Q1 2012 — in less than seven years — all share buybacks combined totaled an even more mind-bending $3.54 trillion.