published: August, 21st 2017
Is There a Bicycle in Your Future?
By: Tommy Williams, President and Founder, Williams Financial Advisors, LLC
Who’s been buying shares of company stock? Since the start of the bull market in 2009, U.S. companies have been buying their own stock. Stock buybacks peaked during the first three quarters of 2016 and have dropped off sharply since then, reports Financial Times citing a report from Goldman Sachs.
Companies participate in stock buyback (a.k.a. share repurchase) programs to improve shareholder value. For example, if company management believes a company’s shares are undervalued, it can buy shares on the stock market or offer shareholders a fixed price to purchase their shares. This reduces the number of shares in the marketplace and increases earnings per share, which has the potential to boost the company’s stock price.
The slowdown in stock buybacks hasn’t hurt stock markets. Financial Times reported:
“The slowing pace of companies buying back their own shares has certainly not halted Wall Street’s stellar run so far this year. While there is a reduced tail wind of buybacks helping boost earnings per share via a lower share count, U.S. companies have reported robust year-on-year sales and earnings growth for the recent quarter.”
In other positive news, the July employment report was music to many investors’ ears. The Department of Labor reported the United States added more new jobs than anyone had expected during July, and the unemployment rate fell to 4.3 percent. According to CNBC:
“The U.S. economy continued a strong summer, adding 209,000 jobs in July. Economists surveyed by Reuters had expected the report to show growth of 183,000; the unemployment rate met expectations. A more encompassing rate that includes discouraged workers and the underemployed was unchanged at 8.6 percent. In addition to the strong July report, June’s 222,000 gain was revised up to 231,000. ‘This [was] an unambiguously positive jobs report, as it suggests that consumers will have the wherewithal to increase spending (with solid job gains and faster wage growth) and that inflation may be slowly pushed higher by tighter labor and product markets,’ said David Berson, chief economist at Nationwide. ‘If the labor market continues to tighten over the coming months, as…evidence suggests it will, the [Federal Reserve] will press ahead with rate hikes… later this year,’ said Michael Pearce, U.S. economist at Capital Economics.”
With U.S. employment in good health, job stability and income means it may be time to take a look at your savings and perhaps review your strategy. If you would like to save more money – for retirement, college tuition, healthcare costs, or some other financial priority – you may be surprised to hear that riding your bike could provide substantial savings!
Whether you commute to work on two wheels or cycle around town doing errands, opting for manpower instead of horsepower can help generate some additional savings, according to a source cited by Bankrate.com:
“The average American household spends over $9,000 a year on transportation, making it the second-largest expense after housing…Many families …don’t consider alternatives like public transportation, carpooling, or biking…That’s a shame, because its status as a major household cost means cutting transportation can radically cut your overall costs and, potentially, increase your ability to save…”
So, you may want to consider pumping up those to head to work (and get a little exercise in the process!). Perhaps the risk of arriving to work drenched in sweat is greater than the reward. Not to mention the risk of traveling on two wheels rather than four! None the less, it is just a thought worthy of your consideration.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. The economic forecasts set forth in the presentation may not develop as predicted and there can be no guarantee that strategies promoted will be successful. This material was prepared in part by Peak Advisor Alliance.
Visit us at www.williamsfa.com. Tommy Williams is a CERTIFIED FINANCIAL PLANNER™ Professional with Williams Financial Advisors, LLC. Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through RFG Advisory Group, a registered investment advisor. RFG Advisory Group, Williams Financial Advisors, LLC, and Peak Advisor Alliance are separate entities from LPL Financial. Branch office is located at 6425 Youree Drive, Suite 180, Shreveport, LA 71105.