It's amazing to see the market pundits chiming in with what the
end result will be in Egypt and how every scenario is a win-win for
the markets in general. Market pundits should stick to what they
really know and not speculate in world affairs. But again, it's
about TV ratings right? Some day business television will get back
to covering just business.
Speaking of the markets, earnings dominated the headlines on
this Tuesday. Winners includes Tupperware (
TUP
), Archer Daniels Midland (
ADM
), and United Parcel Service (
UPS
). On the downside, McGraw Hill (
MHP
) and Eastman Chemical (
EMN
) pulled back following their results. Energy plays rallyied as the
whispers of more deals continue to put a bid under the market. Hess
Corp (
HES
), Devon Energy (
DVN
), and Murphy Oil (
MUR
) all led the way today. Commodity plays were also a big part of
the push higher today, as Freeport McMoran (
FCX
) and Cliffs Natural Resources (
CLF
) spiked higher. There was a definite push today to get us over Dow
12K. You can point to early monthly fund inflows perhaps. Don't get
overly distracted by those numbers. Pay attention to the names in
your portfolio and make sure you are positioned properly. If things
get frothy, we will be prepared to move to the sidelines on some of
our recommended names from a risk/reward standpoint. A rally built
on booming energy prices is not one that helps many other
industries unfortunately.
The real reason the markets have been going up is that
valuations are reasonable and companies are sitting in a great
spot. They have loads of cash, opportunities to buy smaller and
profitable companies, and are now in control of their employees as
far as job opportunities go (not too many people I know are looking
to fuss about working more hours or taking on extra responsibility
in order to keep their jobs). Margins remain robust, but again,
could get hurt a bit if the bull market in commodity prices
continues to accelerate.
As a shareholder, the many companies you invest in should be in
a great position of strength. Yes, there are great stories about
startups like Facebook and Groupon being valued at big dollars and
some do dream of jumping into the startup world, but I will save
that topic for another discussion. For every Facebook we hear
about, there will be hundreds and thousands of startups that will
never make any revenue, despite raising boatloads of money from
private investors. The bull market for hype always seems to
persist, but the reality of building the next Google, Amazon, or
any other social media/ecommerce juggernaut is more of a lottery
ticket than anything else. Playing with other people's money (angel
investors, VC's) has never been sexier - and more fraught with risk
for those willing to sacrifice years of their lives chasing
ever-elusive and constantly changing social media themes/flavors of
the day. As an entrepreneur myself, my advice to the lure of great
riches is to pursue an area of great need, but also one that you
have experience in as well. Do what you love, and if the field is
robust, the money will eventually follow. Don't try and build the
5th best facebook competitor, but instead build a business where
you can be #1 whether it is online or offline.
You may be sitting on a boatload of great recipes and all you
need is a small storefront to open up the next great food franchise
where you could be a leader. "Me-too" businesses are fine too, but
make sure you are a good judge of demand for what you are pursuing
to build. Hair salons are a dime a dozen, but if the location is
good and the talent is in your hands, you can have a nice career.
This I know firsthand as my dad has been cutting hair since he was
14. Bootstrapping Dividend.com was the best move I ever could make
and it saved me the hassles of raising money before I even had a
proven business model. Too often entrepreneurs make the mistake of
raising a round first without having a real business model in
place, then when it's time to raise the next round, they face a big
haircut from a dilution standpoint if their business is going to be
given the lifeline to live another day. Bootstrapping my own
Dividend.com business was the best move I ever could make and it
saved me the hassles of raising money before I even had a proven
business model. Too often entrepreneurs make the mistake of raising
a round first without having a real business model in place, then
when it's time to raise the next round, they face a big haircut
from a dilution standpoint if their business is going to be given
the lifeline to live another day. Like in trading and investing,
weigh the risk/reward carefully before you sign on the dotted line.
Money is never free, so do as much if not all you can to bootstrap
your way to actually making money.
Like in trading and investing, weigh the risk/reward carefully
before you sign on the dotted line. Money is never free, so do as
much if not all you can to bootstrap your way to actually making
money.
I just got word from my publisher (FT Press/Pearson) that my
book's release date is going to be moved up. My rep there told me
that it's a good sign - I guess the pre-orders may be lighting up
their radar.
Be a Dividend Millionaire
is my first book, so I can't really tell you what the outcome will
be. My hope is that the book will resonate with many of the working
class - it's where my roots are and it's all I know! I tried to
make it as simple a read as you can find when it comes to investing
anecdotes. There are some good personal finance tips in there as
well. Also, I included some of my best trading tips for anyone that
can't resist taking their shot at living a more manic lifestyle. It
has been quite a transition from what many would describe was a
daytrader's life to one that now resembles a bit of a pied piper
for investing. One thing I learned back then and I still practice
now is leaving my ego at the door when it comes to how I interpret
the data and how the firm is run everyday. At the end of the day,
it always come down to results and if people are happy with the
work we do here at Dividend.com, then we've done our job.
I have to tell you that I don't miss the day-to-day ups and
downs of waiting for the market to confirm if my trade targets were
chosen correctly. As sexy as business television likes to portray
trading, it is so far from the truth. It is, in fact, quite a
lonely business - and one that keeps you wondering what purpose you
are fulfilling in your life. It took having three kids and being
glued to my screens day and night to realize that I needed to
pursue bigger plans that could help many that are often seduced
into investments/ideas that eventually wipe their hard-earned
income away.
As Dividend.com grows, I often look back at what my feelings
were at the time I was trading. The good days of being on the right
side of the trade and talking to fellow traders who battled in the
trenches everyday, to the down times when I would see days of gains
be lost at the end of the week. Nothing made me more miserable than
finishing the week on a down note. Eventually I realized the career
I chose was not going to make me happy, regardless of the many up
years I had. Launching Dividend.com was not easy, as I knew that
the first year would be spent with 100% of the focus on building
out our DARS rating system. That meant no trading, and thus no
income for me. Knowing the need for what I was building was not a
fad and was going to one day be a key source of information for
investors is what drove me. How does the old saying go? "If you are
not nervous, you are not risking enough." Every stock had to be
ready as far as ratings go when we launched the site. That meant we
needed to go back to each name every so often as the launch was
nearing. I would equate it to a chef that has his hand in every
dish that goes out of the kitchen. Guess what, this is still the
way the ratings system works. No stock leaves the kitchen unless it
has been checked by our team. There are no robots to push our
ratings up or down.
Now I won't tell anyone out there never to try trading, but I do
want you to be true to yourself. If you taste success in the
markets, maybe you can build a business with your knowledge. Take
the knowledge and those good results and make it a career of
helping others. You will get more out of it and eventually you will
see that one day it was the right move for you to build a reliable
income stream from your career. As a trader, you are sometimes only
as good as your last trade. It's not so easy to work with that sort
of pressure for many years.
This brings me back to what investors should be thinking about
these days. There are plenty of places that you can get great
personal finance information, but not many places that you can get
reliable and timely stock research. I hope investors realize that
you get what you pay for when it comes to investment ideas.
Dividend stock investing has been a rock for many investors for
decades and I want to do my best to bring out the benefits to as
many people as possible. Don't hesitate to get started if you
haven't done so yet. The road to wealth is not about booking
profits 20 minutes after taking a position. It's about building a
portfolio of names in companies that will help you build a nest egg
that you will one day be proud of.
Hustle as much as you can while you can. Everyone that is older
can tell you that sometimes the mind is willing and the body is
unable. Do as much as you can every single day you can and lay the
groundwork for some awesome later years. There is still plenty to
enjoy when you are younger and many of us will have some great
times, but nothing beats playing with the house money once we get
older and the portfolio allows us things we couldn't realistically
afford in our 20′s or 30′s (sometimes 40′s too depending on what
you have been able to do in your earning years up to that
point).
Don't forget to check out our library of
"Learn to Be Rich"
articles which give you snippets about personal finance matters you
should educate yourself about. And as always, check out our
industry-leading
"Best Dividend Stocks" List
for the top dividend names to put money into right now.
Thanks for reading and if I can ask you one favor: send this
newsletter to someone you know and let's get others inspired as
well. 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
.