Market Wrap-Up for Feb.29 (COST, SPLS, JOY, FCX, NEM, more)

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The market came out of the gates fairly strong this morning in anticipation of Federal Reserve chairman Ben Bernanke's testimony on the economy. Following several positive economic comments, gold traders darted for the exits in a big way, with the yellow metal losing over $77 an ounce, down 4.3%. Stocks also pulled back in the afternoon, but all-in-all it was another good month for the indices as 2012 is continuing along the same lines as 2011.

Looking at today's market movers, we saw a bit of selling in reaction to earnings from Joy Global ( JOY ) ( earnings report here ) and Staples ( SPLS ) ( full report here ). Shares of Costco ( COST ) however, ended the day higher with investors cheering the latest results from the warehouse club operator. Commodity plays like Freeport McMoran ( FCX ) and Newmont Mining ( NEM ) led the way lower following the swoon in commodity prices today.

A 50% Loss Requires a 100% Gain

I'm often asked about selling strategies, such as when's a good time to cut the string on a bad investment. I'm also asked when to sell winning stocks as well. The answer is pretty simple. Just look to an old expression on Wall Street used by pretty much all of the greatest investors: "Cut your losses and let your winners run."

There aren't many good reasons to sell your winning positions. Of course, if you are under financial duress and need the capital, then your real-life priorities take precedence. When it comes to selling losers, I urge all investors to develop their own sell strategy they feel comfortable with. For example, you should closely examine any position in which a stock has fallen 25% from its 52-week high. Most stocks that perform well will rarely see corrections that are greater than 20% their yearly highs under normal market conditions. Notice I said "normal" markets. When the markets are selling off in unison and undergoing a big correction (2008/2009 was the last big sell-off), it is best to avoid panicking on all your positions. You may want to tighten your portfolio some, but cutting quality companies in a panic is never wise. If anything, you should be stepping up and scaling into your positions more with a steady and consistent buying plan when market sell-offs hit otherwise strong companies.

If you own a stock that has broken away from a nicely-performing market and is seeing further and further selling, an immediate red flag should pop up. Be sure to examine the reasons carefully as to why the stock is dropping. These are the situations that separate the average investor from the great investor. As the title of this section says, it takes quite a bit of gains to make up for holding on to losing positions for too long.

You Can Fool People Some of the Time

In the investing world, we constantly see market pundits change their stripes as quickly as some of Hollywood's finest change their wardrobes. Although I always talk about flexibility as a key factor in successfully navigating the markets, a manic approach isn't the answer. I've seen way too many TV analysts recommend something for investors one week, then come back the next and spit out some new names. Notice there's never any mention of the recommendations from last week that aren't working.

Once in a while, someone can sneak their way to the top of the investing world by spewing a bunch of B.S., but remaining on top is another story altogether - especially when their outlandish claims begins to fracture. As an investor, you need to learn whose opinion you can really trust, and also whose to avoid.

Dividend Stock Recommendation Changes

Be sure to check out the dividend stock we just removed from our Best Dividend Stocks list. The stock has had a big run in the past few months since our recommendation, and is not nearly as attractive from a dividend yield standpoint. We still like the name, but would wait to add new money to the shares for now.

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 Premium members. This list gives readers a good idea of what stocks we're watching behind the scenes here for potential upgrades.

Our Beat The Markets with Dividend Stocks eBook Has Arrived!

We just debuted our brand new 275-page eBook, exclusively on! 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 free download for paid Premium subscribers.

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 Premium homepage now to download your copy.

A Dividend Capture Strategy for Active Investors

We now offer complete U.S. dividend data for all Premium members, so anyone that focuses on "Dividend Capture" trading strategies should have plenty of good stuff to research each day. Just check our enhanced Ex-Dividend Calendar , which is the best in the business, to search for upcoming payouts.

Speaking of dividend capture, Premium members can also access a 9-page report we published on the essential elements to any successful dividend capture strategy. Be sure to check it out here on the Premium homepage .

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 .

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

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This article appears in: Investing , Stocks

Referenced Stocks: COST , FCX , JOY , NEM , SPLS

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