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☕️ Google on deck + could this be the next big buy signal?

Apr 24, 2025

Howdy! 👋

The markets were down on some minor profit taking early this morning but have since gone green as traders try to get ahead of whatever trade deals are in the works.

Makes sense.

Keith’s Rule of the Back Page applies… The biggest, best and potentially most profitable stories are almost always found on the “back page” where very few people are reading along. 

Here’s my playbook.

1 – When the housing market cools, the toolbelt heats up

March home sales just dropped to the slowest March pace since 2009. (Read)

This might, just might, be the start of something bigger.

Cue a potential tailwind for home improvement names like Home Depot and Lowe’s.

I think there’s a case to be made that both companies could quietly outperform over the next few months even as broader housing headlines stay chilly.

Think about it.

The housing market may be stuck, but household wealth in real estate continues to rise. Each 1% in home prices translates to roughly $500B on the household balance sheet according to the Fed’s Reserve Flow of Funds.

That suggests hammers are swinging, tiles are being replaced, and kitchens are getting that long-overdue facelift. Especially with property values holding and especially in regions where growth is still strong, like the Rocky Mountains for example.

Keith’s Investing Tip: Follow the money behind the headlines. When the real estate market freezes, renovation retail can heat up fast. But will it? 🤔

2 – What I’m watching with Google/Alphabet

Google just told some remote employees: come back to the office three days a week—or your job’s at risk. (Read)

The company is tightening its hybrid policies as it slashes costs and doubles down on AI infrastructure.

“Innovation requires in-person collaboration,” says Google.

Makes sense and is right outta the Jamie Dimon playbook.

AI is expensive, and overhead is under the knife. This isn’t about cubicles like most will think. It’s about capital discipline.

Will I touch the stock?

Nope.

Google is still struggling and “me, too” at best when it comes to AI, chips, data, advertising and more… a comment that will no doubt have Googlites rolling their eyeballs.

Google’s trailed peers—and the broader market—for a long time.

Don’t believe me?

I get that a lot.

Every $1,000 invested in $GOOG five years ago would be worth just $2,521.30 today. The S&P 500 over the same timeframe? $1,945.10.

In other words, you would’ve had an “extra” $576.20 by investing in Google… call me crazy, but that’s hardly awe-inspiring.

Nvidia, on the other hand, would have turned that same $1,000 into $14,875.20.

That’s a near 6x gap in wealth creation.

Now, Google reports later today and I will be watching carefully for signs that I am off base or even entirely wrong.

Frankly, I’d like to be!

Google faces a mountain of legal challenges including advertising related monopoly claims, illegal and predatory behavior.

I am also going to watch comments about AI and search. Google reminds me of Kodak which actually pioneered digital photography but didn’t release it because it feared cannibalizing its film business.

And finally, I think Google faces a multi-billion dollar hit from advertising as tariffs bite and Chinese advertisers pull back.

Putskies? 🤷🏻‍

Keith’s Investing Tip: “Catch-up” is not a strategy. Don’t confuse cost-cutting with leadership. ALWAYS “buy the best, ignore the rest!” And be flexible in case you need to adjust your thinking.

3 – Dividend investors beware

PepsiCo missed on earnings, beat on revenue—but cut its full-year outlook citing tariffs, economic volatility, and soft North American demand. (Read)

Shares are down this morning, which means anybody who paid attention to my remarks may well have a big Cheshire Grin on their face. Hopefully, including you.

No big mystery why.

Volume fell across snacks and beverages, with CEO Ramon Laguarta warning of “more uncertainty ahead.” Even the U.S. consumer—the company’s bread and butter—is showing fatigue.

Pepsi has been a name I’ve owned in the past, but one I'm not keen to own at present given what I think will be VERY expensive reformulation headwinds for snacks, sugary drinks and more. (See #4)

I think dividend investors - for whom Pepsi has long been a favorite - might be in for a rude awakening. I hope not, but I’d be remiss not to mention the possibility.

Give it a quarter or three.

Meanwhile, consider investing in dividend alternatives with far higher TSY (True Shareholder Yield) and markets not facing the challenges Pepsi does. 

I write about 'em in One Bar Ahead®, our paid research, if that's helpful. Learn more here.

4 – Betting on the Little Guy in Japan

Japan’s Tokyo Stock Exchange is slashing minimum investment thresholds—some from ¥500,000 (about $3,500) to just ¥100,000—to coax retail investors off the sidelines. (Read)

The goal?

Reignite a market long haunted by the ghosts of the ‘90s bubble.

It’s a big shift. For decades, Japanese households saw stock investing as gambling. Now, with pension gaps growing and younger generations less risk-averse, Japan’s betting on retail demand as the next growth engine.

Will it work?

I doubt it.

I’ve spent 35+ years deeply involved with Japan—as a resident, businessman, husband, father, and son. I care what happens there on a profoundly personal level.

Here’s the challenge:

The very things that once made Japan formidable—discipline, hierarchy, and tradition—have become its Achilles’ heel. Decades of corporate rigidity and cultural resistance to change are exactly why Japan may never reclaim its former global dominance.

Even Warren Buffett’s recent Japan play isn’t really about Japan. 

Let’s be honest: it’s a currency trade. 

Buffett’s playing some high-level currency or debt arbitrage—maybe even using this to “wash” parts of his portfolio.

He’s always been a master at interest rate differentials so this could be a case where he’s borrowing in Yen at dirt cheap rates to finance his stake, effectively creating a carry trade that earns him more in dividends than he pays in interest.

The other possibility – seems to me – that he’s layering in Japanese trading companies to add as a proxy for industrials, commodities and global trade – without having to dump more US holdings. This, if true, would simultaneously “de-risk” his holdings while boosting cash flow without the need for a complete reset.

No doubt Unka Warren has his reasons.

But this move? 

Hard pass, or in Japanese 遠慮しとく (Enryo shitoku)

Keith’s Investing Tip: Culture eats policy for breakfast. Changes on paper mean nothing unless backed by deep behavioral shifts.

Trade Idea: Watch Japanese retail trading platforms and ETFs like EWJ. If retail interest picks up, volumes could jump—and that means short-term momentum for savvy traders. Longer term, not so much... unless you're at Buffett's level.

5 – Rebalancing roulette: - the next big buy signal?

Norges Bank—the heavyweight behind the world’s largest sovereign wealth fund—just took a $40B gut punch in Q1, thanks to tanking tech and ugly currency shifts. Meta, Nvidia, Alphabet, and Tesla led the charge… in the wrong direction. (Read)

Now here’s the kicker.

About 70% of the fund is parked in equities. And since these big boys don’t “trade” like you and me, they’ll likely rebalance... hard.

That means the same megacaps that just crushed ‘em could be back on the buy list almost immediately as the fund's investment committee scrambles to restore balance. 

Talk about a potential tailwind.

Classic!

And something I wish more individual investors understood.

Norges isn't the only fund in this position, btw.

Keith's Investing Tip: Rebalancing isn’t just housekeeping like people think—it’s profit-seeking in disguise. Especially when losses are on the table. Which is why I encourage every investor to do it regularly.

Trade Idea: Keep eyes on the beaten-down leaders, especially in the ETF I mentioned the other day. If the big dogs are buying, a bounce in megacaps might not just be possible—it might be policy.