The Truth About Buyback Stocks
Hey, there. Welcome back. I’m Andy Snyder, the founder of Manward Press. I’ve got something very special for you today. We’re talking about stimulus and Washington spending more money. Consider this the very best stimulus play that you can make today. So if you’ve been a reader for a while of Manward Digest, if you’re not a reader, be sure to sign up below, but if you’ve been a reader of Manward Digest or even Manward Letter, you know I’ve been talking about something a little bit different as the market’s evolved over the last few years. And I just debuted something called Manward’s Modern Asset Portfolio Theory. It sounds complex, it’s not. It’s just telling us that we need to invest differently now that the market is different.
And within that portfolio, probably my favorite piece of that is the idea of buyback stocks. Nobody’s talking about this. And the folks that are talking about it are looking at it completely the wrong way. They’re looking at buybacks as something that used to be illegal. They say it’s market manipulation. They say companies aren’t buying back shares like they used to. Those ideas aren’t wrong, but they’re not entirely right. Buybacks are totally legal. They’re a great form of putting wealth back into the hands of shareholders. And tons of companies are issuing buybacks right now, as we speak, especially due to all this stimulus that’s going on out there.
So to understand why you need to invest in buyback stocks right now, you need to understand why companies would do this. And it all has to do with something you probably heard about a lot, zero interest rates. Right now, companies have the luxury of doing something they’ve never been able to do before. They can go out, borrow money, pay just a few percentage points for it and use that money to buy back their own shares. And when they do, the return on buying back their own shares is larger than what they’re paying in interest because interest rates are near zero. It’s a great form of rewarding shareholders with excess cash and with excess liquidity from these companies. But the mechanics of it don’t really matter. What you need to know is that buybacks are happening a ton right now. You just need to go out and find them. And when you do, you have a company that has the odds in its favor.
Get this, a study by the Standard and Poor’s showed that over the last 20 years, a portfolio of buyback heavy stocks has outperformed S&P 500 by over 80%. So you make $1.00 in the S&P 500, you can make $1.80 by buying buyback stocks. Why would you not do that? These are big, safe companies. Apple, Home Depot has been a big winner, O’Reilly Auto Parts. There’s a ton of companies out there buying back their own shares. You just have to go out there and find them and invest in them. And when you do, almost by default, your portfolio will have a leg up on the overall market.
So go out there, research buyback stocks. I’m writing a lot about it in Manward Digest, and especially Manward Letter, where I recommend some of my favorite buyback stocks. Go out there and research, find them and buy them. You will be rewarded for it. So, that’s it. Thank you for watching. I hope you enjoyed. Go down below, sign up for Manward Digest. I’ll email you every morning with my latest thoughts on the market. And who knows? I might even give some buyback stocks. See you next time. Thank you.