Cumulative Funds Flows and $5 Trillion in Stock Buybacks

Callum Thomas, Jim Bianco, and Win Smart have a trio of Tweets on the S&P 500 worth a close look.

Callum on Fund Flows

10. Cumulative fund flows vs S&P500 -- incredible. Something tells me this is going to be even more interesting in hindsight... @topdowncharts $SPX $SPY pic.twitter.com/jT6CzGVyRv

— Callum Thomas (@Callum_Thomas) October 19, 2019

Bianco on Buybacks in Response

What is missing here is buybacks. Since 2009 S&P 500 companies have bought back $5 TRILLION of the stock. This cumulative flow is SIGNIFICANTLY than mutual fund and/or ETF flows.

This cycle is about buybacks. Investor flows are a sideshow. https://t.co/QWoVK7f88k pic.twitter.com/HRKCFYm0ut

— Jim Bianco (@biancoresearch) October 20, 2019

Win Smart on Buybacks

Buybacks pic.twitter.com/WV2nZADN7y

— Win Smart, CFA (@WinfieldSmart) October 20, 2019

Buybacks Work Until They Don't

Since 2008, GE execs wasted more than $53 billion on stock buybacks.

In 2017, it paid its CEO, Jeff Immelt, a reported $211 million exit package.

Now, in debt, it's freezing pensions for 20,000 employees--while its share price reaches 25-year lows.

just an absolute disgrace https://t.co/a089xJ97BK

— Eric Markowitz (@EricMarkowitz) October 9, 2019

GE Market Cap

Since 2008, GE has spent $53 billion on share buybacks for a market cap of $75 billion.

Go back a few more years and GE will have spent more on buybacks the company is worth.

Aren't executive options and cash-outs great?

Recall that Angelo Mozilo, former Countrywide Financial CEO cashed out over a billion in stock options while running the company into the ground.

Share buybacks provide a strong bid for insider selling at exorbitant prices.