What's going on?

Great minds think alike. Global healthcare giant Johnson & Johnson (J&J), American software titan Oracle, and US aerospace biggie Boeing were all flashing the cash as they flaunted extensive share buyback programs on Tuesday.

What does this mean?

In July, J&J was ordered by a US court to pay $5 billion in damages to a group of women who said its signature talcum powder had given them ovarian cancer. On Friday, a special report from Reuters alleged that J&J knew about the presence of deadly asbestos in its talc for decades without telling anyone. The company denied it, but investors freaked � giving the stock its worst day in 16 years on Friday and wiping $50 billion from the company�s valuation.


Perhaps sensing a bargain � and an opportunity to reassure the market � J&J announced on Tuesday that it�d buy $5 billion of its own stock back from investors. And it wasn�t the only one…

Why should I care?

For markets: When in low-interest-rate Rome�

American companies announced a record $1 trillion of share buybacks this year, thanks both to tasty tax cuts and low interest rates letting companies borrow money cheaply (tweet this). Oracle was able to report a better-than-expected quarterly profit per share this week, helped by buybacks reducing its number of shares. The company�s spent $20 billion repurchasing its stock in the last six months, swinging into debt in order to do so. Boeing, meanwhile, is upping its own buyback game even further.

For you personally: You can benefit from buybacks without selling.

Buybacks usually lead to a company�s share price rising, thanks to the increased demand for its stock � and the indication that it�s confident in its future prospects. Even if the stock doesn�t rise immediately, the reduction in the number of shares outstanding means that those investors who didn�t sell their stakes to the company will have more valuable slices of the pie than before.