Kevin,

Thanks for visiting our blog. On July 31, 2014, The Wall Street Journal reported, “U.S. companies simultaneously have issued record amounts of debt—both in nominal terms and as a percent of gross domestic product—and hold what appears to be record amounts of cash overseas.” As for the pace of stock buybacks, I stand corrected, and I will see that the post is amended. The pace of buybacks through the first half of 2014 was indeed exceeded in 2007, which of course marked the beginning of the end of an unfortunate era of financial stewardship.

Like Warren Buffett, I believe buybacks can be a prudent use of capital, but generally not when CEOs elect to repurchase their stock at record high prices. Long-term shareholders and other key stakeholders are ill-served by companies that prop up a stock through financial engineering at the expense of investing in sustainable growth initiatives.

For an example of just what I’m talking about I would suggest reading “The Truth Hidden by IBM’s Buybacks” in today’s New York Times: http://dealbook.nytimes.com/2014/10/20/the-truth-hidden-by-ibms-buyback…

Also, GMO’s James Montier just spoke at our European Investment Conference on this very same topic. You can view his presentation here: http://new.livestream.com/livecfa/EIC-Montier

Dave