US Share buybacks are reaching new extreme levels.
This is a form of market manipulation on a level we have never before seen.
Everyone wants to look the other way, as such actions support personal investment portfolios going higher.
This ignores a serious and worrying form of market distortion that is rapidly growing in popularity across the US. So much so, that President Biden has announced share buybacks will be taxed.
There is no suggestion that share buybacks support the attainment of corporate bench-marks for the stock price, that trigger bigger annual bonus payments to senior executives, or that those share bonuses additionally have greater value due to the buybacks.
Nonetheless, share buybacks raise serious conflict of interest issues, but no one really wants to look, as there is clearly short-term gain at least for all shareholders.
But does this make it OK? Little consideration is being given as to whether this market distortion to the upside leaves the value of the company ever more vulnerable to an even bigger downturn than would have otherwise been the case, at some future point.
Inevitably, short term market manipulations outside of normal fundamental pressures result in sharp corrections. Sometimes collapse.
Any aspect of markets that creates a bias against selling only ever ends up creating a market that is ripe for collapse.
With the broadest participation in history, this market is now being openly manipulated by the very organisations the market is meant to objectively price. Investors can no longer rely on the stock price as some form of objective indicator.
Yet, for the moment few seem to care. This is the very essence of a Tulip Bulb market. The loss of objectivity to the only end being that of higher prices.
We are all in more trouble than we have any idea of.
