It's the day after another exciting Super Bowl win for the New
York Giants (I have the state right, but once again the wrong
favorite team - Jets), and you can bet some Wall Street players
were a bit slower to get out of the gate this morning. Couple that
with some European economic concerns this morning, and the averages
were in for a bit of a struggle to gain traction.
Earnings results helped push down shares of Humana (
read their report here
) and Sysco Foods (
), while toymaker Hasbro (
) rallied after seeing an early dip on
their earnings numbers
. Wall Street analyst downgrades pulled down stocks like State
Street Corp (
), Amgen (
), and PNC Financial (
). Bucking today's weakness were shares of Walt Disney (
), which caught
some positive analyst commentary
and is slated to come out with earnings numbers this week.
Getting Bullish (After the Fact)
During the latest rally (the Dow is up 17.5% since early
October), analyst opinions about how high the market can go tend to
hit a crescendo - almost like clockwork - before the next pullback.
Most pundits point to a better-than-expected economic recovery for
the bullish bias.
Has the economy really recovered, though? The answer depends on
who you talk to. Those who are well-off probably see things in a
positive light. People who are still struggling to pay the bills,
however, likely see things very differently. I doubt many workers
who have been unemployed for multiple years will buy the argument
than things have gotten much better.
From an investing perspective, we have plenty of anecdotes to
derive information from. Things like earnings reports, economic
data points, surveys, etc. can all shape the way we think about the
economy. The business media certainly never hesitates to ask
market-watchers to chime in on these topics. What bugs me is when I
read super-bullish articles after the market has already put
together a big run. This trend tends to get traders in near market
tops, rather than reinforcing a bit of patience in the near-term.
But that's the game. I understand why it happens, and have gotten
used to it after my many years in the markets.
Getting ultra bullish is not a requirement if you're looking to
put money to work in a prudent fashion. Common sense and
consistency work best when it comes to building long-term wealth.
Whenever the media's message is that "the train is leaving the
station," you can bet investors (and definitely day traders) could
be in for a bit of short-term pain rather than gain. Consider these
points if you feel your emotions influencing your market
Bloomberg: "Rick's Imports Strippers for Indianapolis"
Yes, you read that right. Believe it or not, the above was an
actual headline on Bloomberg.com this past Friday. In fact, it was
the third headline down in their "top stories" box!
I naturally wondered what the investment implications were for
this article. Granted, gentleman's club operator Rick's Cabaret
) does trade on the Nasdaq, but the story was simply something
related to this past weekend's Super Bowl. Now I know Bloomberg.com
has been a trusted business news source for many years, and will
remain so, but to make the storyline above a key headline? Come on
Anyone that reads my newsletters knows I shake my head often
when I talk about business media today and the "cheap pop" tactics
that are in place to bring in ratings. Don't get me wrong, there
are plenty of talented people who produce great commentary for
viewers, but there exists a lot of amateur-hour work as well. In
some cases, I look at the information as no better than local news
coverage. Anyone that relies on the local news to break down
economic and business stories is likely going to get nothing more
than a generic, watered-down overview of where things stand.
As I always say, you should find yourself a few key sources that
can keep you focused on building wealth. Consider what really
matters to your bottom line, and leave the sideshows to others who
think entertainment is essential to their investing results.
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I hope everyone had a chance to check out our
members-only weekend articles , including new features that
highlight some of the biggest winners and losers from the week that
was, such as analyst upgrades/downgrades and earnings/story stocks.
These articles are a great way to catch up on the week that was in
the markets. We also have a rundown of how various Dividend ETFs
performed on the week.
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