2008 January | Capital Flow Watch

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Stock repurchases

Buyback bear rages: the worst is yet to come

By John Schroy, on January 23rd, 2008 |

On September 17, 2007, Capital Flow Watch called the top of the Buyback Bubble, issuing a warning that stock prices might be in for a sharp fall. Throughout the last quarter of 2007, stock prices fell as funding for buybacks began to dry up, while executives rushed to exercise stock options before they were ‘under water’.

Equity sales by households are expected to continue, until executive options are ‘under water’ or until corporations run out of funding for stock buybacks, whichever is first.

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