a refutation of the "buybacks have fueled the rally" argument.
I have no idea how to evaluate the validity of its argument.
http://finance.yahoo.com/news/torsten-slok-david-bianco-stock-buybacks-share-repurchase-myth-120836246.html
Ever since the financial crisis, corporations have been buying back trillions of dollars worth of their stock.
In doing so, a popular narrative developed: the bull market is the product of financial engineering. And there’s some merit to this argument. When you companies reduce share count — all things being equal — shareholder value is created because the same profits are distributed among fewer shares. Furthermore, by buying stock in such mass quantities, companies directly put upward pressure on stock prices.
However, Deutsche Bank’s Torsten Slok and David Bianco believe it’s a mistake to attribute the bulk of the market's gains to buybacks.
“Since March 2009 the market capitalization of the S&P500 (^GSPC) is up around $10 trillion and the total amount of buybacks over the same period is around $2 trillion,†Slok said on Monday. “In other words, the vast majority of the increase in the S&P500 has nothing to do with buybacks.â€