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Another Sign the Stock Market is on Thin Ice: Companies are Buying Back Stock at Prices Above Replacement Value

By:

The Founder & Portfolio Manager Of Active Alts, Principal & Co-Manager Of The Advisorshares Ranger Equity Bear ETF

The chart below shows that many stocks are priced above their replacement costs and companies are buying back stock at high prices above replacement value. So why do companies continue to pay ridiculously high prices above replacement cost for their own stocks? That’s because they are trying to prop up earnings at any cost. That’s what happened in 2000 before the major downturn. So watch out! This is yet another indication the market is trading on very thin ice. (Thanks to Jill Mislinski for the chart from Advisor Perspective)

Originally Posted on October 25, 2019 – Another Signs Stock Market is on Thin Ice: Companies are Buying Back Stock at Prices Above Replacement Value

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Lamensdorf Market Timing Report is a publication intended to give analytical research to the investment community. Lamensdorf Market Timing Report is not rendering investment advice based on investment portfolios and is not registered as an investment advisor in any jurisdiction. Information included in this report is derived from many sources believed to be reliable but no representation is made that it is accurate or complete, or that errors, if discovered, will be corrected. The authors of this report have not audited the financial statements of the companies discussed and do not represent that they are serving as independent public accountants with respect to them. They have not audited the statements and therefore do not express an opinion on them. The authors have also not conducted a thorough review of the financial statements as defined by standards established by the AICPA.

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