Last week, I talked about how “good value” means “reduced risk.”
At the time, markets were pretty unsettled. We’d seen a 900-point intraday swing for the Dow Jones Industrial Average and a trip from Monday lows of 24,122.23 to Friday highs of 25,578.98.
Now, even with a crazy midterm election reaching its climax, we’re on pace for the best week for the stock market in eight or nine months.
I’m still looking at the same signals, though.
And what I see tells me it’s still all about what real companies do on the ground and whether that translates into more cash.
Here’s something else I wrote last week: “Management has to execute… and execute… and execute… to justify higher prices.”
Stocks are going up, and the rally’s legs seem refreshed.
And here’s how I think of it: If something was already overvalued, there’s not a lot of good time spent doing new math.
Where My Focus Remains
So, my focus remains on revenue, earnings, cash flow, and identifying what’s real and what’s fake.
You wouldn’t believe how entertaining that can be… especially during those moments when everyone else’s hair is on fire.
I’ve heard it come up in a couple different contexts recently; I don’t recall exactly when and where, but it does strike me, because I’m not really a war analogy guy. Only war is war.
Napoleon made a great point when he said, “The true genius in war is the one who can do the average thing when all those around him are going crazy.”
It’s just not my nature to go crazy (unless, of course, A.I. can’t even get the beer taps straight…)
So, I’m taking a look at the whole Hidden Profits model portfolio with two questions in mind:
- Is it a good value?
- Is it a unique opportunity?
We’re about taking as much emotion out of this process as we can. The investor who wants to get rich has to do that.
And this is The Rich Investor. “Systems” are what we do.
Numbers in Pictures
Good times are rolling again.
But I stand by another thing I shared last week: Market action is changing.
Here’s a little “election day secret” almost literally nobody else has talked about – and it’s got “catalyst” written all over it…
Take a look at this chart. It shows how many companies have been in the “blackout” period for announcing stock buybacks.
The tipping point is around November 6 – as in “Midterm Day.”
Let’s see if we start to see a lot of fresh buyback announcements. A steady stream could support stock prices.
Buybacks have certainly been a key driver of stock performance since the market bottom in 2009.