Recently, many big corporations have taken their ample cash reserves and used them to make huge repurchases of their shares, with 3M (NYSE:MMM) having joined the bandwagon with a $12 billion buyback that will represent 14% of its total market capitalization. But many investors worry that companies have terrible timing with buybacks, suggesting that rises in buyback activity could point to a top in the market.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, talks about the buyback phenomenon and how NVIDIA (NASDAQ:NVDA), Halliburton (NYSE:HAL), and Viacom (NASDAQ:VIAB) have made similarly large buybacks in comparison to their respective market caps. But Dan notes that historically, companies haven't made buybacks when their share prices were at their lowest, instead spending the most during bull markets. With 3M trading near all-time record highs, Dan suggests that you should be careful with stocks with big buybacks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.