We woke up on the East Coast to 20 inches plus of snow this
morning. Couple that with a vacation week for many and the recipe
for a roller-coaster day was in place. Volume finished about 40%
lower than we have been seeing of late.
The last week of the year is when I would like investors to
really give their portfolio a thorough check-up to see if any weeds
may have over-grown. If you use my down 25% rule to start giving
serious consideration to trimming a position, you should not ever
have to see big losses in your portfolio. It's one thing if the
market is down everywhere, but if that is not the case and you have
a stock that is down over 25%, this is certainly a sign to pay
attention to. It is not easy for investors to sell, but it is a
discipline that one needs to have, even with dividend-paying
stocks.
I have been following many of the 2011 predictions that have
been coming out from various pundits and they go from the
ultra-bearish to the ultra-bullish. It is fun to read these
predictions, but remember that they are only that. Some pundits
will be pretty accurate and some will be well-off. Be sure to check
out the
video
Tom and I did this past Thursday, where we chime in ourselves with
what we can possibly expect to see as 2011 nears.
I wanted to share with everyone that may not have heard of
something called the "rule of 72″. This is great for dividend
investors to know as they try and figure out how quickly your money
can double. Basically take the annual percentage return - let's say
the stock's price and dividend increases 12% combined in a year,
you would divide 12 into 72. That means your investment in that
particular stock would double in 6 years. If it returns 6% per
year, it would take 12 years to double. Keep this in mind as you
look to build long-term income and wealth.
Looking at today's market, we had traders looking for anything
that was moving and "rare earth" stocks (MCP, REE) are continuing
to attract their attention. Commodity plays have been a favorite
for active investors, so long-term positions in the sector need to
be evaluated carefully. Gold-mining plays continue to have me
concerned. Looking at the stock price action in RandGold Resources
(
GOLD
) and Agnico-Eagle Mines (
AEM
) has me worried that the crowded gold trade could be taking on
water soon. If you are sitting on nice profits, be sure to protect
your positions with stop-loss orders. I still see the gold move as
better suited for traders and not long-term investors. Elsewhere,
Visa (
V
) and Mastercard (
MA
) had a good day, despite the snowstorm putting a big dent into
after-Christmas sales. It was a tough day for H&R Block (
HRB
) as the company appears to be losing a key agreement for refund
checks that had been in place with HSBC (
HBC
).
We will continue to look for opportunities that we feel good
about adding to our "recommended" list, and will keep subscribers
updated as to any new names, or names that we feel should go back
to the sidelines when it comes to new capital or further
investments in.
Back to the outdoors and more shoveling so some of us can make
it into the office sometime this week! Thanks for reading and I'll
talk to 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
.