[jstanley]

> Buybacks create a tendency toward higher share prices, but only while they continue.

Buybacks increase the share price because you have a company that is worth (for sake of argument) the same as it was worth before, except now there are fewer shares available.

A fixed market cap divided by fewer shares equals a higher share price.

In the limit case imagine buying back all but 1 share. Now that 1 share represents the entire value of the company, so the share price would equal the market cap.

[mitthrowaway2]

The company is worth a bit less after the buyback, because it's given away some of its money, which was part of its valuation. But the effect should still be positive on the share price.

[jstanley]

Good point.