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Five Things

We are in the middle of low volume summer trading in the stock market.After last quarter’s pullback, stocks are beginning to gradually move higher again. Recent economic news shows an economy that is still struggling with high unemployment and a sluggish housing market. But 2nd quarter earnings have been good and though corporations have been cautious in hiring, they will eventually have to do something with the nearly $2 trillion in cash they are sitting on.That means good things for the long-term investor.

Think about it-there are only 5 things that a company can do with its cash.They can: 1) pay dividends to shareholders, 2) buyback their stock, 3) acquire other businesses, 4) pay down debt, or 5) re-invest in their business. All of these outcomes are good for stock investors.Though the economy is still struggling, stocks have gotten considerably cheaper following the correction that started back in April. In fact, the S&P 500 Index is now trading at a price-earnings value that is 40% below its 20-year historical average!Looks like a good time to be buying stocks.

Have a great day!

Bob

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