There is currently a record amount of share buyback activity. While many find this development troubling, it isn’t. First, buybacks really aren’t financial engineering. They total just 2% of stock market value/year, and only 25% of the largest firms that are re-purchasers have EPS as part of their executive pay plans. Second, buyback activity is dominated by firms that specialize in intellectual property, and they can’t productively reinvest all earnings.