Why is it bad when a company buys-back its own stock? They become ZOMBIES, The "Walking Dead" of Wall Street

What happens to companies that buy back their own stock with debt? They become Zombies. The situation gets even worse when companies buy back stock in periods of rising interest rates and at a time when stocks are trading at all time highs.

So, why is it bad when a company buys back its own stock? Here's the answer: EPS is a measure of company performance. It is calculated:

Net Income / Shares Outstanding

Stock prices tend to go up when a positive earnings per share (EPS)  is announced, and down when negative EPS is announced. CEOs and CFOs know this and will do everything they can to "windowdress", especially to disguise a bad year or quarter.

When a company buys its own stock it reduces the number of shares outstanding and increases EPS even though the company made no additional net income. This is how a company can lose money and still have a growing EPS. They will tell you they are doing it as a way to reward the shareholders, which is true as long as the company is cash rich like Intel or Apple, but most companies are borrowing money to finance stock buy-backs, and they are doing it at a time when shares are selling at their highest multiple in years. These companies are referred to as Zombies, they are the walking dead. I did not make this term up. Read more about the rise of the Zombie firm here.

So what? 

What does this mean if you're an investor?

 It means you need to focus on companies with earnings, not earnings per share. If a company isn't making a profit (read: net income goes down), but the EPS is still going up, it's a red flag because this can only happen one way -- if the company bought back shares. It's a super red flag if debt is going up at the same time and the company is using the debt to purchase shares (read: shares outstanding is going down). You don't want to own these companies. These are great short opportunities.

What does this mean if you're a consumer?

 It means companies will be competing for your dollar more than ever. These are hard times for local retailers who must compete against online retailers as well. They also don't have our undivided attention like they did 20 years ago. Which is to say the new entertainment model (Netflix, Amazon Prime, etc) allows most of us to opt-out of watching commercials. Now, retailers are looking for ways to get back in your head. Enter rewards or cash back programs. These programs have become better at reaching a wider audience than a traditional ad or commercial. Not only has the number of programs increased, but the percentage of cash going back to the customer is growing. This will come back to the retailer in one of two ways: 1) it will grow foot traffic at the expense of pricing or 2) it will create  write-offs. Write-offs can be pushed to the next quarter or year and they allow a company to drastically reduce prices in the current quarter. Either way, look forward to heavy discounts this holiday season to increase foot traffic.

My Top 3 Automated E-commerce & E-marketing Tools: Swipe Vault, The Amazing Widget & Backlink Beast

My Top 3 Automated E-commerce & E-marketing Tools: Swipe Vault, The Amazing Widget & Backlink Beast

I’ve had a few people ask me what tools I use to grow my audience. There are a lot of websites out there promising to be the holy grail and I’ve gone through many of them (painfully), but these are my top 3.

These software programs will help you to:
  1. Find and use only the best sales and marketing ad copy — Swipe Vault
  2. Place automated sales agents all over the web selling your products — The Amazing Widget
  3. Rank # on Google -Backlink Beast
You will notice one theme here: actual applications or software that you can start using today. I’m not a fan of “success coaches” or paying for people to tell you what to do. I’ve gone through several success coaches and they never seem to work as well as a robot or an app that actually does the work for you. Sorry coaches.

The following tools help you automate marketing and sales functions overnight. They’ve all been proven to be successful. Each of these tools takes the place of a marketer or researcher on my team. I get full time support with an automated application that takes a few minutes to employ. It also costs a lot less than hiring someone full-time.

Also, keep in mind that all of these products come with a 60 day money back guarantee. In other words, if you don’t like the product or if it doesn’t deliver, you can contact the retailer at any time within the 60 day guarantee period for a full refund. This has been verified.

Let’s get started…

Swipe Vault — Best online library of sales and marketing copy

I’m a writer and this is where I go for copy. There, now you know my secret.

In a nutshell, this is a place to find the best sales copy on the web. There’s no easier way to put it.
What’s different about Swipe Vault? It’s backed by data. The folks at Swipe Vault have created an algorithm that takes a deep dive of the Internet and copies or “swipes” sales and marketing material that’s been proven to work. It does this by finding high-converting, high-sales, high-traffic websites and reverse engineering the marketing material that has made these sites successful. It’s like having your own personal consulting or research team.

Some folks say this is stealing. It’s not. It’s taking a snapshot of sales and marketing best practices from high performing websites and applying it to your own shop. You are paying Swipe Vault for access to what works. The algorithm is constantly working so sales copy recommendations never get stale.

The application starts off by giving you some options: you can either start a new business, grow your old business or concentrate on getting more traffic.

You also have a number of courses such as “Membership Method” and “Amazon Secrets”.
For more information click here. Remember, you have 60 days to test drive it.
Now on to recommendation #2…

The Amazing Widget — Place a viral sales agent all over the web

The Amazing Widget
This is one of my favorite tools, primarily due to the referral activity it provides (and if you follow me, you know how much I like referrals). The Amazing Widget gives you the ability to:
  • Create unlimited, custom promotional widgets for any niche.
  • Quickly place and spread them across the web using an instant sharing tool.
  • Promote the affiliate products of your choice.
Keep in mind that each Amazing Widget promotes *two* products, as shown in the image below. One through the top (image) ad, and one through the bottom (text) ad.
The Amazing Widget
I’ve used free widget programs and this is worth the money. You’ve got 60 days to give it a try so you can see for yourself. I love this product.
Finally, recommendation #3…

Backlink Beast — Improve your Google rank overnight

The name sounds sketchy I know, but this is an amazing tool that allows your page to rank FAST. And, a higher ranking means free marketing and higher sales.
Ranking is all about building back-links the right way and this tool does just that. It was created post Panda and Penguin Google updates so no worries there and it provides more “hands off” link diversity than any other program on the market.

It automates your link diversity by building thousands of links from thousands of sites. Unlike other so-called “automated” link building programs, Backlink Beast has eliminated most of the manual work involved in link building with:
  • Automatic account creation (create 1000’s of accounts on the fly)
  • Automatic content submission
  • Automatic anchor text diversity
  • Automatic Link Reports generated for you after each successful submission.
It’s like having 100 employees creating your accounts, submitting your content, building your links, and generating your reports at the same time.
Again, you get 60 days to give this a try to see if it works for you.
Backlink Beast

So that’s it. If you have any products you’ve found to be exceptionally helpful for you and yours this year please add them in the comments below. Please include the refund policy on all products listed and whether or not you’ve personally tried the product.
Wishing you much success and a debt free new year!

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