The markets pulled back a bit as we started the new trading
week, partly on news surrounding this morning's Chicago PMI data.
The latest PMI info showed business activity in the U.S. Midwest
slowed more than expected in April, falling to its lowest since
November 2009 as new orders slipped.
We didn't see too many earnings results yet this week, but the
pace will surely pick up tomorrow. However, M&A/partnership
news helped move several names. Shares of Sunoco (
) closed up 19% on
news it will be acquired by Energy Transfer Partners
). Also spiking higher were shares of book retailer Barnes &
) on news
) will invest $300 million
in book retailer Barnes & Noble Inc's (
) digital and college units. There were likely plenty of
short-sellers having a tough morning, as BKS shares, which closed
at $13.68 on Friday, were recently trading a touch above $22 a
share. Ouch! Elsewhere, we saw selling in earnings-related plays
) and NYSE Euronext (
). Coca-Cola (
) shares edged lower on rumors the company is preparing a major
takeover offer for competitor Monster Beverage (
), or possibly a strategic partnership.
Sell in May and Go Away? Not Quite
As we get set to start the month of May tomorrow, pundits begin
to tout the age-old "sell in May and go away" strategy. As is the
case with many pieces of "conventional wisdom," this strategy is by
no means fool-proof. If you'd sold in May 2009 and stayed in cash,
for example, you would have missed out on incredible gains.
Furthermore, dividend investing isn't about trying to time the
markets (which is nearly impossible to do, by the way). Instead,
dividend investing is more about consistently investing each month
and stockpiling dividend payouts. So if you are a long-term income
investor, ignore the scuttlebutt from the media, and proceed as
dividend investors always do: searching for the best ideas to
invest in month after month.
Look Ma, No Revenues!
The New York Times ran a great story this past weekend about how
start-ups are being advised by venture capital investors to hold
off on producing any revenue early in their company's development.
This strategy allows the big money chase to push valuations higher
and higher as the start-ups raise rounds of financing.
We just saw Instagram acquired by Facebook this month for $1
billion, and the company had zero revenues. This trend will last
until the spigot shuts off, usually whenever the stock market has a
deeper pullback. When that will be is anyone's guess. You can be
sure, however, that the wider (mostly oblivious) media will pick up
on the start-up valuation insanity long after the correction
happens. In the meantime, the stories can't help but make great
Investing in People
It's funny how the sports world never seems to learn its lesson
regarding investing big money in athletes with questionable
character issues. One of the big stories out over the weekend
highlighted an NFL draft pick selected in the second round.
Supposedly, the player had a great deal of talent, and could have
been drafted in the very first round.
The player had some personal issues when playing at a big-name
college, however, and eventually was forced to transfer to a much
smaller school to play college football. Additionally, the young
athlete has reportedly fathered four different children with three
different women (by the age of 23, mind you). If I were looking to
invest in talent, whether it was sports-related or not, I'd be
looking a bit deeper to see if the risk/reward made any sense to
Whether you are building an organization, or even looking for
that perfect spouse, you should pay close attention to any
character issues with your prospects. No one is perfect, but
rolling the dice on a person with obvious flaws generally isn't a
good idea. One lesson I learned from my parents was that when
something was very difficult in the beginning, it would probably
get even more difficult later on down the line. This rule of thumb
is one of my favorites, and I suggest you share it with your own
kids and grandkids.
In business, the top organizations tend to scope out their
talent pool with a microscope. This fact means that young folks
should be very careful in their decision-making process. You'd be
surprised how important character is when it comes down to deciding
between several candidates.
Beat The Markets with Dividend Stocks
eBook Has Arrived!
We just debuted our brand new 275-page eBook, exclusively on
Dividend.com! In this digital-only book, we look ahead to 2012 and
the main factors that could affect dividend investors. A $39.95
value, the eBook is a
Beat The Markets with Dividend Stocks
contains a full economic forecast for 2012, including in-depth
analysis on 65 of the biggest dividend stocks out there. It's a
great way to get prepared for your investing next year! So head
over to the
Dividend.com Premium homepage
now to download your copy.
I hope everyone had a chance to check out our
members-only weekend articles , including new features that
highlight some of the biggest winners and losers from the week that
was, such as analyst upgrades/downgrades and earnings/story stocks.
These articles are a great way to catch up on the week that was in
the markets. We also have a rundown of how various Dividend ETFs
performed on the week.
Thanks for reading everybody. I'll see you tomorrow!
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here
Created by Dividend.com