Update - July 27, 2021

Record-Low Rates = Record-High Stocks

Is it any surprise that Bitcoin rallied over the weekend?

If you’ve been following our logic… absolutely not.

Last week, I wrote to you about the falling yield on the 10-year Treasury. Just hours after my note went out, the real yield (that’s the nominal rate minus inflation) struck a record low… -1.13%.

When rates dip, speculative assets like crypto become all the more attractive.

It’s why I say they must be a part of your portfolio when rates are this low.

Yes, a wannabe digital currency is risky. Yes, it’s doubtful the crypto space will look much like it does now in a decade. But as long as rates stay low, investors don’t have a choice but to speculate.

Net it all out, and the opportunity is clear. It’s no surprise that our crypto stake is the biggest gainer in our portfolio these days.

Then again, it’s also zero surprise that the stock market rallied to new highs last week. It’s just like I wrote in my update last Tuesday… We’re “setting up for a big move higher.”

Low interest rates are the fuel propelling this market higher. We can forget nearly everything else.

Take advantage of dips.

Right now, buying whenever the nominal yield on the 10-year dips below 1.2% is a very smart idea.

If you’re looking for something to buy, check out Logitech (LOGI).

The company released its fiscal first quarter figures this morning and flat-out crushed Wall Street’s estimates.

Profits came to $1.22 per share, well ahead of the $0.96 analysts were expecting. Total sales came in at $1.31 billion for the quarter, above estimates of $1.2 billion.

The reason for the huge move forward is quite simple: the work-from-home movement.

Logitech is a global leader in webcams and video collaboration equipment.

And it appears that while folks are working from home, they may also be doing some gaming. The company’s gaming segment was its fastest-growing last quarter. Sales rose 84% year over year.

But there is one thing I’m watching closely with this stock: share buybacks.

If you recall, low interest rates are a big reason companies are buying back huge slugs of their own shares. With low rates and a lukewarm economy, share buybacks have proved to be one of the better uses of a company’s capital.

Logitech made the news last quarter when it announced that it once again boosted its buyback program. It expanded the program from just $250 million to $1 billion.

But looking through the figures today, I don’t see the company making a mad rush to grab its own shares – at least not over the past three months. It spent $50 million last quarter. I want to see that number grow quickly from here.

It likely will.

If it does, shares are trading at a discount today. They sold off this morning in more of the typical sell-the-news fashion we’ve seen so often over the last 15 months.

The sell-off, which does bring us close to our official trailing stop, isn’t rational.

If you don’t own shares yet, look to buy them at today’s prices.

For those who do own shares, I’ll keep an eye on our stop and advise accordingly. As I write, we’re up 65% since getting into the play.

It’s the power of low rates and a good buyback stock.