Announcer:
4 Your money is brought to you by NelsonCorp Wealth Management.
Brandy Auterson-Hurst:
It’s now time for 4 Your Money. We’re joined by John Nelson, financial planner at NelsonCorp Wealth Management. Welcome back John.
John Nelson:
Thank you for having me, Brandy.
Brandy Auterson-Hurst:
So stocks have rebounded quite a bit lately. What’s driving that recovery?
John Nelson:
Yeah, they certainly have, and I think we’ve seen a variety of factors in play there. One being corporate buybacks that I’m going to speak to today. We’ve seen significant increase in corporate buybacks. That’s where companies are repurchasing their own stock from the open market. And the graphic I have with me today illustrates what we’ve seen, which has been historic. So, so far this year, this is looking back over the last decade, showing how much in terms of corporate buybacks have been purchased. And we’re seeing over $600 billion so far this year, which is the highest, the largest ever seen so far into the year. April alone was 234 billion, which ranks second highest month on record. So we’ve seen significant increases there where companies are seeing their stock, their own stock, at a price where they see it being attractive long term, which has provided a fair amount of support I’d say for companies and the market overall here recently.
Brandy Auterson-Hurst:
So why are companies doing this and what should the average investor take away from it?
John Nelson:
Yeah, some people view it as the smart money, where are they going? Obviously they saw price points where they feel their business is in a place that that’s an attractive stock price where they can take things eventually higher. So I’d say investors seeing that as a positive cue for the market overall. And we’re definitely leaning more towards the equity markets and they’ve responded very favorably the last three to four weeks. So it’s a trend that we’ll see if it continues, but it’s a good indicator overall.
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This video includes a paid appearance.