The futility of trying to time the market
After a global technology business paid about $900 million to buy back its shares in 2004, for example, it spent increasingly large sums to do so just as prices rose. When they peaked, in 2007, it devoted upward of five times more money to repurchasing shares than it had in 2004. Yet the company spent less to buy them back in 2008 and nothing in 2009 or 2010, though prices had fallen by around 50 percent and profits remained strong.
Few companies can pick the right moment to sell. Long-term shareholders will be better off if management forecasts total excess cash and evenly distributes it each calendar quarter as “dividends” in the form of share repurchases. To learn more, read “The savvy executive’s guide to buying back shares” (September 2011).
From: http://www.mckinseyquarterly.com/newsletters/chartfocus/2012_03.htm