Higher share prices make buybacks more expensive
(and beyond that, buying stock that is overvalued is a questionable way to spend shareholders’ money).
Cash may be high in relation to profits, but it is low in relation to market capitalization, except in Japan. In the U.S. buybacks are almost as expensive for companies on this measure as they were 20 years ago.
All the previous extremes, when debt was particularly low as a share of equity valuation, came at a point when both the equity and credit markets were about to run into trouble
(Nice chart)
John Authers Bloomberg 14 september 2021
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