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Interesting article in today's WSJ

Author: Mark Hulbert

Snippet..

A Surprising Connection Between the Bull Market and Stock Buybacks

Buybacks are more important than economic growth when it comes to equity-market performance, study says

Whatever else you may think about stock buybacks, it’s quite likely that, but for them, the U.S. stock market today would be markedly lower.

That is the implication of a study published last year in the Financial Analysts Journal, “Net Buybacks and the Seven Dwarfs,” by three researchers from the Abu Dhabi Investment Authority. They found that net buybacks—the number of shares that companies repurchased across the entire stock market, less the number of new shares issued—explain the bulk of the intermediate- and longer-term differences in stock-market returns around the world.

This comes as a surprise, because the conventional wisdom is that economic growth is by far the most important factor in the outperformance of certain countries’ stock markets in recent decades. The researchers found little support for this belief."

https://www.wsj.com/articles/a-surprising-connection-between...

Have a copy of the FAJ study. The author's main finding:

"In short, the main finding of this study is that the cross-sectional relationship between stock market returns and net buybacks has been significantly positive. Net buybacks have explained 80% of the cross-sectional dispersion of stock market returns of developed and developing markets since 1997, hence dwarfing the seven other building blocks considered in the decomposition of stock market returns: dividend yield, real per capita GDP, price-to-dividend variation, profit margins, payout ratios, relative dynamism of the market index versus the economy, and inflation/currency returns."

https://www.cfapubs.org/doi/abs/10.2469/faj.v74.n4.4

Certainly supports Buffett's love of buybacks (under the right circumstances of course).
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