Anonymous asked in Business & FinanceInvesting · 2 months ago

is the MAIN reason (maybe mostly only reason) that the stock market keeps rising is due to corporate " buy backs"?

they are manipulating the market to go higher and higher and this is suppose to entice unknowing people to jump in the market too?  why?


to "Zman492" or whoever else can answer this added question... IF it is due mostly to the Federal Reserve creating endless "Q.E."...then how does this money get injected into the markets exactly?  are they directly buying shares? how?

8 Answers

  • 2 months ago
    Favourite answer

    No, that is not the main reason, but it does contribute to the increase. 

    The main reason is that the federal government is borrowing huge amounts and keeping interest rates low.

  • Steve
    Lv 6
    2 months ago

    Why does it even matter? Just get what you can and be happy with that.

  • ?
    Lv 7
    2 months ago

    If I'm the ceo of a company and I know my stock is worth $100 per share, and its sitting at $50 per share, then I'd be a fool not to start a corporate buy back of some the shares. For every dollar the company spend buying back shares they get $2 in value (assuming I was right that the stock was severly underpriced).

    If I'm a ceo and the stock is priced at $100 and I think its worth $50 then I'd be a fool to buy back any shares - on the contrary I might issue new stock or debt and sell any shares I personally owned.

    So, generally buy backs are a good thing to set right the value of undervalued companies (and move the price up thus helping the investors who didn't sell into the buy back). 

    I feel like anyone who says buy backs are a bad thing simply doesn't really understand how they work. 

    Now ceo's can be wrong too and buy back shares when they shouldn't but betting against the ceo and board of directors is a fool's bet.

    Also, buy backs are a really tiny piece of the current market rally, and really just about any market rally. I agree with many that the stock market appears very overvalued, but don't blame buy backs; it might have more to do with the current 0% fed rate than anything else.

  • 2 months ago

    The market is rising due to many reasons, one of which is corporate buybacks. When a corporation buys back its own stock, there are fewer shares outstanding, which theoretically gives you a slightly higher percentage of ownership.

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  • 2 months ago

    Sometimes but not this time.  The market is encouraged by the progress of the vaccination trials and expects the country to gradually return to the stupendous prosperity that Trump achieved last year.  If Biden reinstates confiscatory taxes this exhuberance may abate. 

  • Anonymous
    2 months ago

    God, I wish you would STOP POSTING. 

    The stock market has been rising for hundreds of years.

  • 2 months ago

    There is a certain degree of un-certainilty in the economy so many companies are holding or increasing their cash reserves if case there is a turn down in the economy or the Corona virus gets really bad.

  • Petter
    Lv 7
    2 months ago

    No, the main reason is lack of other just as lucrative money schemes to pump their money into, and the fact that no one wants the market to crash. Corona, recession, bad times or not doesn't seem to matter anymore. The costs of a crash is simply too great, this charade will go on until it implodes on itself.

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