Buybacks Not So good for stocks

It seems that massive stock buybacks actually cause stocks to lose value according to some research.

The same appears to hold true over the longer haul. Take the 10 largest buybacks announced last year. On average, the group saw its share prices decline by 1.8% in the year following their announced buybacks, according to MarketWatch research. Seven of the 10 posted negative returns for the period.

Yup if you bought the $1 billion or more buyback company you would have actually lost money. That is why I like one time dividends instead. You get a nice chunk of change that is usually a few 100 bucks. The stock usually stays about the same price so it is just guaranteed money for just holding the stock for a few months. Can't beat that kind of thing. I agree 100% with this statement though:

"We occasionally run into circumstances where a stock seems to be misunderstood, and a buyback in those cases can demonstrate confidence of management," Oberweis said. "More indicative in my book is to have management themselves buying the stock, because it's very different to do something with your own money instead of someone else's money."

Insider buying is a massive vote of confidence when it comes to a stock. That means the managers have their money on the line exactly the same as you. It makes you feel like you are on the same team as them.