Update - November 17, 2020
Buffett Sees Things Our Way
Stocks are hitting new records. The Dow closed yesterday just one quick surge away from 30K.
It’s a great time to be an investor.
It would be easy to write that stocks are soaring “despite” the economic headwinds… the pandemic… the crippling lockdowns… and so many small governments running a race to go broke.
But that’s not the case.
Stocks aren’t soaring despite the bad news… They’re soaring because of it.
It’s the basis of my Dow 100K philosophy, and it’s what’s leading the “buyback dominators” section of our Modern Asset Portfolio to rapidly growing gains.
[Note: Several readers have written to me about what the “Long Short” means. I know it’s a bit confusing… so we’re changing the name of the Long Short Portfolio. It will now be called the Dow 100K Portfolio. Our thesis is still the same. The assets in this portfolio will outperform – and benefit – as the Dow surges skyward thanks to the Fed’s desperate meddling in the economy and markets.]
The Oracle Sees It Too
I picked on Warren Buffett and his underperformance in our last monthly issue. I’ll use him as an example again today – with a bit more positivity.
The Oracle is clearly starting to see things as we do.
He just directed his Berkshire Hathaway (BRK) to buy back yet another $9 billion of its own shares. That’s on top of the $6.7 billion or so the firm grabbed earlier in the year.
It proves our point. As the economy goes in reverse and there are signs that the worst of the trouble lies ahead, Buffett has found that the best use of his massive cash stockpile is to jack up his company’s share price.
It’s certainly not good news for the economy. But for his shareholders, it’s a powerful force shooting share price higher.
Over the last decade, it’s arguably been the most powerful bullish force on the market.
That’s why it’s so important to focus like a laser on buybacks and the stocks that are doing them. They will lead the way higher.
As long as the Federal Reserve keeps interest rates at rock-bottom levels and the economy creeps along as it has for the past decade, the trend will continue.
If you’ve followed my advice, you already have some jingle in your pocket.
Our Buyback Leader
If you recall, I recommended that you buy shares of Logitech (LOGI) based on the Swiss company’s buyback plan.
That plan is starting to ramp up.
During the year’s first quarter, Logitech bought back none of its own shares. But last quarter, it dished out $22 million.
Looking at volume trends, I suspect that number will rise during the current quarter. We will find out when the company opens its books in mid-January.
But we don’t have to wait that long to reap the rewards of the increased buying pressure. An effective buyback plan not only adds a layer of support to share price but also helps send it higher when demand for shares is strong.
That’s what we’re seeing now as more lockdowns are adding strength to the work-from-home sector.
It makes this a strong buying opportunity.
Doubling down on the idea is the latest read from the technical system that’s behind my Codebreaker Profits algorithm. It looks at the latest moves from a stock, compares them with historical parameters and tells us whether it is a “Buy.”
Right now… it’s begging us to buy.
That means if you haven’t yet bought some shares of Logitech, now is an ideal time to do so.
We are already up by more than 25% on the play, but that gain is likely to jump higher as a cold, dark winter sets in… and the company pours cash into its own shares.
Bottom line… it’s a great time to be an investor, even if it’s not for all the right reasons.
Don’t sit on the sidelines.