With the U.S. markets looking to shake off the recent weakness,
all eyes were on the overseas markets for a sense of direction. Our
markets have tended to follow the lead of Europe and Asia with a
"you're up, we're up" and "you're down, we're down" approach - and
vice-versa. It's a sort of merry-go-round of trying to find footing
in what has been a very volatile past month or so. Unfortunately
the overhang of today's trading scandal involving Knight Capital (
) spooked some investors.
Monthly retail sales figures had a positive impact on shares of
Gap Inc. (
), Macy's (
), TJX Companies (
), and Target (
). On the other end of the spectrum, data was disappointing for
investors who own Guess Inc. (
), Best Buy (
), and Abercrombie & Fitch (
), which announced
a big cut in earnings guidance
. Moving on to earnings, some key names to the upside include Time
Warner Cable (
), Metlife (
), and Prudential (
). On the downside, investors saw red following results from Apache
) and Williams Cos. (
More Money, More Problems
Yesterday's New York Times has a great story about hedge fund
titan Louis M. Bacon returning $2 billion, or 25 percent of the
main fund he manages at Moore Capital Management, to his investors.
His reason? Mr. Bacon said he simply can't invest when governmental
actions (bailouts, printing money, etc.) affect financial markets
more than basic economic/fundamental factors. In a nutshell, Mr.
Bacon said the markets are acting unnaturally, making investing
large sums of money extremely difficult.
Thankfully, as individual investors, we have a lot more
flexibility than Mr. Bacon. We have the ability to move in and out
of markets when we need to, unlike huge hedge fun managers with
billions of dollars on the line.
That doesn't mean I've advocating short-term trading, just that
I see flexibility as a huge advantage for disciplined investors. If
you know your investing strategy well, you don't have to worry
about risking your portfolio holdings' values when it is time to
exit a particular situation. Anyone investing in a hedge fund is
certainly taking on a certain level of risk in the hopes the
returns are higher than they can achieve on their own. But
sometimes, the risk simply isn't worth it.
The risk becomes especially high when someone needs to gain
access to money because of a certain event in their lives (paying
for a wedding, college tuition, buying a home, etc.) and are fully
exposed to the wrong type of asset that can fluctuate wildly,
causing too much uncertainty about the money being there when you
For most investors and the vast majority of our audience, we
tend to take a cautious approach to markets that are ripping higher
and not break out the pom-poms to cheer-lead the already-frothy
markets higher. If you've been reading this newsletter regularly,
you know we've been highlighting the risks of investors chasing
yield to unattractive risk/reward levels. That's why we've been
steadily trimming our
Best Dividend Stocks List
to only include the best possible high-yield risk/reward names.
25 Years of Dividend-Increasing Stocks
We recently updated our list of dividend stocks that have been
paying out dividends for 25 years or more. Be sure to check out
the latest list of names here
Dividends Really Matter
Financial blog DailyReckoning.com recently took a look at the
difference dividend payouts made in the overall return investors
saw throughout the prior decades. Here are some of the
- The Nasdaq is down 28% since the end of 1999. Even the "blue
chip" S&P 500 stocks are down 15% during that time frame…until
you add back those "boring" dividends. With dividends included, the
S&P 500′s 15% loss flips to a 6% gain.
- Without dividends, the S&P 500 index would have produced a
loss for the 25 long years from August 1929 to August 1954. Then
again, without dividends, the S&P 500 produced a 5% loss during
the 13 years from September 1961 to September 1974. But with
dividends included, the S&P's loss became a 46% gain.
- Over the course of the last half-century, dividends have
contributed more than half of the stock market's total return -
56%, to be exact.
Of course, you can't discuss the potency of dividend investing
without making mention of how awesome compound returns are. I can't
stress enough the power of compound interest: you take a small
amount of money and turn it into a large amount over time. Finding
the right companies at the right price points which not only grow
earnings, but also grow their dividend payouts as well!
New Watchlist Article Out Today
Be sure to check out our weekly Top 50 High-Yield Watchlist
Names post that is out today, exclusively for
members. This list gives readers a good idea of what stocks we're
watching behind the scenes here for potential upgrades.
Go Beyond This Newsletter
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Best Dividend Stocks List
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Thanks for reading, and I'll see you tomorrow!
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Best Dividend Stocks
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