Market Wrap-Up for Aug.10 (DIS, RL, COF, TGT, HD, GLD, more)

By
A A A
Share |

The first thing we did this morning was check to see how the overseas markets would be trading following yesterday's late-day bounce on Wall Street. Unfortunately the gains were much smaller than most had expected.

This point was somehow overlooked by Wall Street analysts, because outside of Jefferies & Co. speaking cautiously about the retail sector, it was business as usual with dozens - if not hundreds - of bullish upgrades today.

We, however, are not ignoring the market uncertainty that has dominated the trading action of the past several sessions. As you can see from today's moves ( 12 stocks taken off our recommended list ), we are remaining alert to the potential risk for further downside.

Looking at today's biggest market movers, we saw shares of Walt Disney ( DIS ) getting hit hard (closing down 9%) following the company's earnings results. On the flipside Polo Ralph Lauren ( RL ) finished up over $5 on its big earnings beat. Shares of Capital One Financial ( COF ) bucked the selling and traded slightly higher following the announcement it will be acquiring a gigantic credit card unit ($33 billion) from HSBC ( HBC ). It would seem a very risky move to make and almost reminiscent of companies buying mortgage firms as the real estate market was peaking. The bet for Capital One of course is that consumers will continue to spend at the high rate they have been spending for years. If the job market doesn't continue to worsen, they may be in good shape, but still a risky bet in my opinion. Don't forget that Capital One just wrapped up a fairly large acquisition of ING Direct not too long ago.

Meanwhile, the Jefferies downgrade of several retail stocks is hitting those stocks in this weak open. Pushing the way lower were shares of Target ( TGT ), Home Depot ( HD ), and Kohl's ( KSS ). Investors once again piled into the SPDR Gold ETF ( GLD ) with the equity markets selling off.

People have become increasingly disenchanted with the volatility we are seeing on Wall Street, but as I have said in the past, if you can stick to a good selling discipline, you will avoid any blow-ups in your portfolio, all while allowing your nest egg to continue to build. For those of you who may be new readers, today is a good day to go over what I consider a good method for a selling strategy.

If the stock you own in your portfolio drops 25% from its 52 week high, you should put it on your radar and find out exactly why the stock has dropped. There are usually two reasons why a stock falls. Is it company specific news pulling the shares lower, or is the overall market lower and the stock is just moving in lock-step with the selling? Investors can not be afraid to trim a position. Remember, there have been many formerly great brands that have lost their way, despite paying dividends for many years (General Motors, Eastman Kodak, etc.). It is every investor's responsibility to take charge of their portfolio and have the discipline to make changes, and that includes selling a stock that is pulling down a portfolio's performance. We are in a similar market environment that we saw back in 2008, despite numerous market pundits saying that isn't the case. At Dividend.com, we will will make the tough calls, whether they are sell calls or simply calls to avoid adding to current favorites at this time (as we did earlier today with a dozen stocks).

With the Federal Reserve going on record yesterday stating that interest rates are going to stay extremely low for the next couple of years, investors still need to make up for that continued lost income - and dividend stocks will still be a great way to accomplish that. That means our team at Dividend.com needs to be as accurate as possible with our calls. That will always be our main objective, regardless of market the environment.

Thanks for reading, and I'll see you tomorrow! P.S. Please pass this e-mail on to someone you think can use some financial motivation as well as being kept in the financial news loop that could affect them.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

Created by Dividend.com


This article appears in: Investing , Stocks

Referenced Stocks: COF , DIS , GLD , HBC , HD

Dividend.com

Dividend.com

More from Dividend.com:

Related Videos

Stocks

Referenced

Most Active by Volume

210,395,138
  • $10 ▼ 19.22%
96,887,808
  • $16.99 ▲ 1.13%
95,228,035
  • $75.86 ▼ 6.08%
56,807,621
  • $11.21 ▼ 4.02%
49,508,265
  • $107.34 ▲ 0.56%
43,870,160
  • $3.35 ▲ 0.60%
39,156,225
  • $42.08 ▼ 3.88%
37,305,534
  • $99.81 ▼ 0.37%
As of 10/29/2014, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com