Who’s been buying shares of company stock?
Since the start of the bull market in 2009, U.S. companies have been buying their own stock. Stock buybacks peaked during the first three quarters of 2016 and have dropped off sharply since then, reports Financial Times citing a report from Goldman Sachs.
Companies participate in stock buyback (a.k.a. share repurchase) programs to improve shareholder value. For example, if company management believes a company’s shares are undervalued, it can buy shares on the stock market or offer shareholders a fixed price to purchase their shares. This reduces the number of shares in the marketplace and increases earnings per share, which has the potential to boost the company’s stock price.
The slowdown in stock buybacks hasn’t hurt stock markets. Financial Times reported:
“The slowing pace of companies buying back their own shares has certainly not halted Wall Street’s stellar run so far this year. While there is a reduced tail wind of buybacks helping boost earnings per share via a lower share count, U.S. companies have reported robust year-on-year sales and earnings growth for the recent quarter. That has helped offset the decline in buyback activity, but some warn that the clock is ticking for Wall Street bulls.”
There was no sign of a slowdown in the bull market last week, though. The Department of Labor reported the United States added more new jobs than anyone had expected during July, and the unemployment rate fell to 4.3 percent – the same level as May 2017, which was the lowest in 16 years, according to Barron’s.
Jobs growth was music to many investors’ ears.
Financial Times reported, “U.S. equity indices hovered near record highs – with the Dow Jones Industrial Average touching an all-time peak of 22,089.05 in early trade – with financials bolstered by the rise in yields. European [markets] ended the week on a strong note, helped by a sharp retreat for the euro against the dollar.”
Saving Is as Easy As Riding A Bike! If you would like to save more money – for retirement, college tuition, healthcare costs, or some other financial priority – hop on your bike and ride. And while you’re at it, tell the kids to do the same. When it comes to commuting, bike transportation is far more practical for teenagers (those with more time than money on their hands who are always asking for gas money). However, whether you can commute by bike or just want some time with the wind in your face, it’s still good fun and great exercise, no matter why you do it. And if your kids are still asking for gas money, make sure they are also using some of that gas in the lawn mower – and then using the mower to cut your grass – so you can go ride a bike.
As it turns out, riding your bike may help boost your savings. Whether you commute to work on two wheels or cycle around town doing errands, opting for manpower instead of horsepower can help generate some additional savings, according to a source cited by Bankrate.com:
“The average American household spends over $9,000 a year on transportation, making it the second-largest expense after housing…Many families simply take for granted the two-car, driving-to-work arrangement that’s the norm for American households and often don’t consider alternatives like public transportation, carpooling, or biking…That’s a shame, because its status as a major household cost means cutting transportation can radically cut your overall costs and, potentially, increase your ability to save…”
If you are serious about saving, imagine what your finances would look like if you:
In addition to saving money, two-wheeled travel options are likely to improve your fitness and reduce the stress of rush hour driving. Cycling may even eliminate the need for dieting and some medications. Here’s an added bonus: If biking improves your longevity, you may have more time to spend the money you save!
Weekly Focus – Think About It
“Life is like a 10-speed bicycle. Most of us have gears we never use.”
--Charles M. Schultz, Cartoonist