A stock buyback, also known as a "share repurchase", is the act of a company buying back its own shares from the marketplace. On the positive side, you can think of a buyback as a company investing in itself, or using its cash to buy its own shares. But as Barron's columnist Ben Levisohn says “Like the Wizard of Oz, who was revealed as nothing more than a man behind a curtain working some cool special effects, stock buybacks might not be the great and powerful market force they were thought to be.”
Suddenly, buybacks appear to be suffering from diminishing returns. Why aren’t buybacks working like they were? A big part of the problem might be their popularity. Prior to share buyback mania-statistics show that companies that have a track record of repurchasing their own shares have historically outperformed the market. Steve and Sinclair dig into share buybacks and their effects on the market. In the Q & A, Steve reviews what goes into a comprehensive financial plan, and what separates a good plan from a mediocre one.