The big issue with share buybacks

Companies are buying back more of their own shares than ever before. That’s not a healthy sign, says John Stepek.

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Apple CEO Tim Cook launched a $100bn buyback
(Image credit: 2017 Getty Images)

US-listed companies look set to buy back as much as $1trn-worth of their own shares this year, reckons Goldman Sachs. The investment bank notes that firms have already authorised just over $750bn-worth of buybacks, with Apple alone launching a $100bn buyback earlier this year. The boom is partly a result of US tax reforms, which have cut taxes and enabled companies to repatriate cash from abroad, freeing up more money for buybacks.

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John Stepek

John Stepek is a senior reporter at Bloomberg News and a former editor of MoneyWeek magazine. He graduated from Strathclyde University with a degree in psychology in 1996 and has always been fascinated by the gap between the way the market works in theory and the way it works in practice, and by how our deep-rooted instincts work against our best interests as investors.

He started out in journalism by writing articles about the specific business challenges facing family firms. In 2003, he took a job on the finance desk of Teletext, where he spent two years covering the markets and breaking financial news.

His work has been published in Families in Business, Shares magazine, Spear's Magazine, The Sunday Times, and The Spectator among others. He has also appeared as an expert commentator on BBC Radio 4's Today programme, BBC Radio Scotland, Newsnight, Daily Politics and Bloomberg. His first book, on contrarian investing, The Sceptical Investor, was released in March 2019. You can follow John on Twitter at @john_stepek.