Last week we published a post about recent share buybacks. In that post, the article we referenced noted that the 100 stocks with the biggest buybacks had outperformed the S&P 500 by 10 percentage points in 2013, but trailed the S&P 500 by about 1 percent in the first quarter of 2014. As we like to caution our students - Be careful of numbers. A more recent article about share buybacks notes that the top 100 repurchasers have outperformed the S&P 500 by about 1 percent so far this year, a reversal from the previous article. So, while the companies with the largest buybacks didn't outperform the S&P 500 in the first quarter of 2014, they did in the second quarter.
While this is interesting, the more important point for you going forward is to critically examine historical numbers. Just because something happened in the past does not mean that it will occur in the future, or, in this case, just because a past relationship doesn't hold during a specific time period doesn't mean that that relationship won't continue in the future. In short, a sense of skepticism is a healthy thing when dealing with historical numbers.
