Start the conversation
Comment on This Story
Or to contact Money Morning Customer Service, click here.
The financial news networks have their hands full.
That's why today, I want to talk to you about something they're missing…
You see, the buyback corner of the market has been serving up record-breaking numbers lately.
Now, I know that "buybacks" may not sound like the most exciting thing in the news right now – but the truth is, they're extremely important for the overall market.
And this could be the one catalyst we're looking for to rally the market higher.
Here's what I mean…
The Buyback Record Breaker Could Pad Your Pockets
Well, corporate America has officially been under the new tax law, and they celebrated it by rolling out a new record: $1 trillion of stock buybacks.
This record-setting year was led by Lowe's Companies Inc. (NYSE: LOW) and AbbVie (NYSE: ABBV). The two combined offered $34.4 billion in buybacks in December.
This buyback boom can easily contribute to the strong economic growth we've seen, and when you add on the corporate tax overhaul that was signed into law, this strong buyback trend shouldn't be a surprise.
You see, the new tax law leaves companies with a lot more cash to help pump up their stock price. Not only did the new tax law reduce the corporate rate, it also handed corporations a large break when it comes to foreign profits.
And companies have wasted no time in utilizing this extra cash, using it to reward shareholders. Buyback announcements spiked around 64% in 2018.
Fast Money: This powerful secret made one man a millionaire. Now he's sharing it live on camera – find out how you could use it to become $2,918 richer in less than a minute. Click here…
Now, buybacks are always a sign of good things to come. You see, they tell investors that the company has confidence in its growth prospects – and it also shows confidence in the operations, sales, and revenue-producing potential over a longer haul. This make the company much more appealing to investors, as you'll know the stock has the capability to continue to climb in price.
Here are the top three reasons why share buybacks are good for the stock market – and your pockets:
About the Author
Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.
Leave a Reply