Read Between the Li(n)es!

Apparently, it wasn’t enough for greedy CEO’s of public companies to line their pockets by borrowing $1.8 trillion in cheap Fed money, earmarked for wage increases, infrastructure and expansion and then to divert it instead, along with an additional $300 billion, to company stock buyback programs that artificially inflate stock prices, thereby paying greater executive bonuses and giving shareholders an artificial sense of well-being, while leaving the company emaciated, listless, and incapable of growth even if the perfect opportunity presented itself. And preparations by public companies for the coming trade war seem to be following a similar pattern.

The escalating possibilities of a trade war, once again have public companies looking to reroute funds earmarked for capital expenditures into stock buybacks instead, pushing already record levels of corporate share repurchases even higher. But adding to public company atrophy will be the misdirection of a new cash infusion, provided by the tax cut, once again earmarked for wages, infrastructure and expansion, instead being once again utilized for stock buybacks, which does nothing but weaken the company in the long run. The S&P 500 Buyback Index, which identifies and tracks the results of the top 100 companies in the Index with the highest buyback ratios, has announced that since the start of January, those hundred companies have gained 3.2%, substantially behind the 3.9% gain reflected in the broader market. I guess crime just doesn’t pay like it used to.

Trim Tab Corporation announced that companies in the benchmark S&P 500 saw a record $436.6 billion spent on stock buybacks in the second quarter, nearly doubling the previous record of $242.1 billion, which by the way was set in the first quarter! I’ve been mentioning this trend, in the confines of this blog, for at least a couple of years, but I really had hoped that the trend was receding. This confirms that the greed of CEO’s in public companies is an overriding force and in spite of the potential for some investors to use this trend to their advantage, the majority of investors are going to be damaged by the stock market collapse it will help to precipitate and unfortunately some will be decimated or even destroyed.

I’ve been suggesting for a couple of years now, that gold, silver and other physical precious metals are the best portfolio protection possible, but the lower prices for these metals today are providing an astronomical amount of room for growth, once this market collapse finally takes root. It should be painfully obvious at this point, that public company CEO’s aren’t the least bit concerned about investor well-being. Equally, when Congress bailed out the banking system in 2008 and gave those executives responsible trips to Club Med on the Riviera, instead of Club Fed in Leavenworth, you should have realized that the government’s not looking out for you either. And even though your broker calls you practically daily today, don’t expect to receive his calls when the collapse kicks in. For that matter, don’t expect him to be available at all! Call American Billion at (800) 653-4653 and help yourself!

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