We all wish we were better at knowing just when a stock was about to dive or about to take off, but a recent study shows that even executives buying their own stock are unable to know that. The research firm FactSet tracks repurchases of a company's own stock by top execs, and found they are much more likely to buy high and sell low, rather than the other way around.
The recent peak for repurchases of stock came at the outset of the stock market downturn, back in the fourth quarter of 2007. During that quarter, companies listed in the S&P 500 spent $141.7 billion buying back their own stock. That number plunged along with the larger market, until the first quarter of 2009, when those same companies bought back only $30.8 billion of their own stock. In retrospect, the market was a tremendous bargain at that point, but the company leaders didn't see that.
They seem to be getting better at this, though. There were more repurchases by S&P 500 in the third quarter of 2011, when stocks were notoriously sluggish, than they were in the fourth quarter, when the market began to rebound.
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