Goldman Considers ‘A World Without Buybacks.’ It Looks Ominous.
- Corporate demand for stocks has dwarfed other investors
- A ban on buybacks would spur stock volatility, a drop in P/Es
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With political scrutiny of stock buybacks growing, Goldman Sachs started assessing an extreme scenario: “a world without buybacks.” The picture doesn’t look pretty.
That’s because corporate demand has far exceeded that from all other investors combined, according to strategists led by David Kostin. Since 2010, net buybacks averaged $420 billion annually, while buying from households, mutual funds, pension funds and foreign investors was less than $10 billion for each, Federal Reserve data compiled by Goldman showed.