The CEOs of the biggest corporations in America are Ivy League educated MBAs with the common sense of a nitwit. Did they ever hear the phrase – buy low, sell high? Evidently not. These boneheads just completed purchasing $500 billion of their own stock at all-time record highs. The PE of the market has only been higher twice in history – 1929 and 2000. Do they pay these idiots millions of dollars to purposely piss away shareholder wealth?
The chart below details the pure and utter stupidity of corporate CEOs. The only time in history when they purchased more of their own stock was in 2007, prior to the 50% crash in stock prices over the next 16 months. To understand the true brainlessness of these arrogant hubristic assholes, you have to look at 2009. In the year where stock prices were 50% lower than one year before, these titans of finance bought back the LOWEST amount of stock in the last thirteen years. These morons continuously buy high and sell low. The previous peak in stock buybacks was 2000. That worked out well for stockholders too.
And now for the cherry on top. Don’t believe the bullshit about corporate balance sheets with record levels of cash. Corporate debt levels are at all time highs. Guess what they used the debt for? That’s right. They borrowed to buy back their own stock at all-time highs. Fucking brilliant!!!!
Luckily their disgusting level of compensation is based on Earnings per share. Guess what goes up automatically when you buy back your own shares? With less shares, EPS is boosted higher. These were the same CEOs begging to be bailed out by the taxpayer in 2009. When this farce blows up in the near future and their companies go into the toilet again, these idiots will declare that no one could have seen this coming.
The idiocy and fecklessness of these CEOs never grows old.
$500 Billion In 2013 Corporate Buybacks: Half Of QE
Submitted by Tyler Durden on 01/06/2014 08:38 -05005
Everyone knows that the Fed, through the bank excess reserves/cash deposit pathway, participated in indirectly purchasing some $1 trillion in risk assets in 2013 through POMO – a process that many have confused with economic recovery. It is also known that corporate stock buybacks have managed to keep S&P500 EPS rising by removing the total number of shares outstanding (and thus lowering the S in EPS in a world where absolute E stubbornly refuses to grow): after all, someone has to keep those activist shareholders happy or else they release unpleasant letters about corporate CEOs.
However, what may not be known is just how large the total amount of corporate buybacks in the past year was. The answer: the second highest in history, just shy record of 2007 (when there was no additional $1 trillion in stock purchases coming from the Fed/Primary Dealer complex), amounting to $500 billion (even if non-US buybacks have been a tiny fraction of US).
Presented otherwise, corporations injected roughly half of the total POMO cash used by the Fed to push the S&P straight-line higher.
For the sake of stocks, and with QE tapering, let’s hope that this critical buyer remains in the market or else the tapped out retail investor may have a tough time to keep the S&P at its now more expensive than 2007 level for long.