what is a stock buyback

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Company Stock Buybacks: Good or Bad?

company buybacks

Company stock buybacks sound innocent enough: a stock buyback occurs when a company repurchases its own shares.

But the effect is insidious. Buybacks inflate paper profits without producing anything of tangible value -- which means earnings will be inflated and misleading to investors.

That's why Money Morning Capital Wave Strategist Shah Gilani accuses buybacks of being a large part of the "financial engineering" going on in U.S. markets right now.

In the following video, Gilani explains exactly how company stock buybacks work -- and how investors can make money in the buyback game: