Thursday, April 07, 2005


Dell Computer is buying back 2 Billion Dollars worth of shares. Dell joins a growing list of companies that has extra cash and believes its own stock is the best investment. The entire world is in a highly unusual situation. It is very rare for stock earnings yields to be higher than bond yields. This situation makes stock buybacks and mergers very likely. Why should any company invest its surplus cash anywhere but in its own shares if the shares are already producing superior returns. Buying back shares is a way of raising operating leverage. Companies with higher operating leverage bring more profits to the bottom line when top line sales growth increases.

The jobs report is out. Jobless claims came out at 334,000; not too strong, not too weak. The market is ready for a good move. The market has worn down sentiment. The bulls and bears sentiment figures are as low as they have been since the last significant bottom. Certainly the numbers can go lower. The market will most often disappoint more than once before a major move. On the other hand, the economies that have been slowing are gathering steam again. I am positioned aggressively because I want to be fully invested when the next phase of the Bull Market begins.


Joseph wills said...

Best of luck for the Dell..Its my best brand and Dell knows how to remains on top selling brand's list..
data recovery san francisco