stock buyback information and how stock investors should reactBuying stock in companies the smart way CLICK HERE Companies buying shares back really isn't all it's supposed to be as many investors say it is. Basically companies like to do this to reward the CURRENT SHAREHOLDERS of the company. It works like this: if the company buys stock back it's owned by the company, and the number of shares on the open market are reduced. Supply and demand takes effect thus many times if the demand stays the same the price is supposed to go up thereby benefiting the current shareholders. The only problem with this assumption is that the company may be having major problems which will counter this effect. If the company is having major problems the fact they reduced the number of shares on the open market doesn't mean the price will go up at all. Many times this is just simply a waste of corporate time and money for the current shareholders when they could be buying other assets to help the business rather than stock assets. finding good stocks What market strategy should I use when this happens?I personally don't like buybacks because I feel that a company should be spending it's time and money on trying to grow and find new products-marketing etc. However, in the short run it may be good for the current shareholders since the number of shares are being reduced on the open market. If you own a company that recently has had a buyback, I think that you should sell if the price goes up much. The company share price may rise due to decreased supply of shares on the open market, but ultimately how well the company does will depend on their earnings which will be justified by many variables unrelated to the number of shares. If they are wasting energy in buying shares back, this is a sign of bad management they need to be doing something else more important to the shareholders rather than try to artificially inflate the value of the shares. good stocks |