SPDR S&P 500 (SPY)

[tw0122]

At some point a business must justify its stock price through higher productivity — not parlor tricks.

The S&P as a whole spent roughly 2% of its profits on buybacks in 1981.

And last year?

That same index devoted 50% of its profits to buybacks.

Might we here have an answer for America’s stagnant productivity?

Or at least a partial answer?

Every dollar sunk in buybacks is a dollar unspent on plants… equipment… research and development.

But let us come down from our box of soap and turn to the question at hand.

If buybacks will keep stocks afloat this year… when can you expect the crash?

Late 2019 or early 2020.

This is the conclusion of Scott Minerd, Global chief investment officer at Guggenheim Partners