In the New Gilded Age, Capital is not for Investment

Many years ago, Goldman Sachs published research showing that, from about 1995 to 2004, more money had been taken out of S&P 500 companies in dividends and share buybacks than the companies had earned during that period.

You would think Boards of Directors and Shareholders would know better than to do it again. You would be wrong (registration required):

Stock buyback activity in US equity markets is simply staggering at present: $646 billion for the 12 months ending June 2018 for the companies of the S&P 500. Total dividend payments aren’t far behind, at $436 billion. The bright spot: the total of the two is $1,082 billion, only 90% of 12 month trailing operating earnings of $1,197 billion. That’s a better buffer than existed in 2015/2016, and an underappreciated positive for US stocks….

Unlike 2015/2016, the companies of the S&P 500 are no longer spending 100% or more of their operating profits on buybacks-plus-dividends. In those years, the ratios were 108% and 102%, respectively.[all emphases mine]

Companies are not re-investing.  Anyone who expects productivity growth in such an environment is probably going to be gulled into believing there is a Great Stagnation, and not the Return of the Robber Barons.