New York, NY (PRWEB) October 28, 2012
In a recent Profit Confidential article, Michael Lombardi, financial expert and lead contributor to Profit Confidential, notes that big-cap companies in key stock indices are buying back their shares at a record pace. In the second quarter of 2012 alone, U.S. corporations purchased $95.9 billion worth of their own shares, reports Lombardi. He adds that this was an increase of 15.6% from the previous quarter. (Source: FactSet, September 28, 2012.) According to Lombardi, while stock buybacks might be great short-term news for shareholders, increasing buybacks should be a caution sign regarding the rising key stock indices.
Lombardi notes that with the majority of the companies in the Dow Jones Industrial Average releasing their corporate earnings in the current and upcoming weeks, many investors are anticipating reading into the earnings report to get a better gauge for how the economy is performing. The Profit Confidential expert believes that companies in key stock indices are on track to showing negative corporate earnings growth in the third quarter, compared to the third quarter of 2011.
Lombardi points to Alcoa, International Business Machines (IBM), Intel, and FedEx as firms that have already either reported or warned about weaker-than-expected earnings growth.
Lombardi believes more companies in key stock indices will provide negative guidance about their corporate earnings, as big-cap companies are struggling due to the slowing U.S. and global economies.
In the article “New Trick: How U.S. Companies Are Propping Up Their Profits Now,” Lombardi thinks that in the current stock market, executives are fleeing as the insider selling-to-buying ratio is at a record high, earnings growth is declining, and participation and trading volume are minimal.
Lombardi thinks that with the S&P 500 on track to showing its first negative corporate earnings growth in 11 quarters, increasing buybacks should be another caution sign regarding the rising key stock indices.
“Be aware of this game being played by big-cap companies,” warns Lombardi. He concludes, “Share buyback programs can certainly be good at times, but at the accelerated rate at which they are happening, this time the motives may be questionable.”
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.