Another Signs Stock Market is on Thin Ice: Companies are Buying Back Stock at Prices Above Replacement Value.
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)