What's The Big Idea?: Goldman Ponders a World Without Buybacks

The video discusses the potential impact of a US Senate proposal to ban share buybacks by US-listed companies. Goldman Sachs' chief strategist, David Kostin, highlights the significant role buybacks have played in supporting market valuations and suggests that their absence could lead to lower EPS figures, increased market volatility, and more varied returns. Kostin's analysis of blackout periods, when companies are unable to buy back shares, shows typically lower returns in the S&P 500, indicating the stabilizing effect buybacks have had on the market.

What is the main concern regarding the proposed US Senate legislation on share buybacks?

• It might reduce the number of companies going public.

• It could ban US-listed companies from buying back their own shares.

• It might artificially inflate stock prices.

• It could lead to increased corporate taxes.

According to David Kostin, how much have net buybacks in the US averaged annually over the past nine years?

• $100 billion

• $420 billion

• $500 billion

• $10 billion

What potential market effect does David Kostin suggest might occur if buybacks were to end?

• Higher dividend payouts

• Lower EPS figures and more volatility

• Increased market stability

• Decreased market liquidity

What are blackout periods in the context of share buybacks?

• Periods when companies cannot buy back their shares

• Times when companies announce earnings

• Times when stock prices are at their peak

• Periods of high market volatility

How do returns in the S&P 500 typically compare during blackout periods versus non-blackout periods?

• Returns are the same during both periods

• Returns are lower during blackout periods

• Returns are unpredictable during blackout periods

• Returns are higher during blackout periods