Market Wrap-Up for July 13 (COF, FCX, CLF, CAT, SPG, more)

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Following yesterday's late day sell-off, Federal Reserve chairman Ben Bernanke took center stage this morning testifying before Congress that a new stimulus program could be in the works. The new stimulus could include additional "untested" asset purchases - if needed.

The market averages shot higher on those words as investors continue to believe Mr. Bernanke is steering the markets on the proper course. We certainly hear arguments from both sides as far as stimulus goes, but at the end of the day, Mr. Bernanke will continue to look smart as long as the stock market rises. Washington has fully given in to using the stock market as their scorecard, so anyone that remains on the sidelines will continue to miss out on solid investment returns. The rally did lose a decent amount of steam during the afternoon, but we did still manage to close higher on the day.

As for the big movers today, commodity plays ramped higher, as traders try and get ahead of any economic bounce. Companies like Freeport McMoran ( FCX ), Cliffs Natural Resources ( CLF ), and CF Industries ( CF ) all saw solid gains. Gold and Silver prices shot higher on talk of an accommodating Federal Reserve. Meanwhile, cyclical plays like Caterpillar ( CAT ) and Cummins Inc.( CMI ) were gainers. Traders love to look at those high-beta names in a strong tape as we have today. From a dividend standpoint, the names above provide little downside support with below-average dividend yields. Capital One Financial ( COF ) ended lower after the company announced earnings results, which included a $2 billion stock sale to fund its purchase of ING Direct. Also down were shares of several REITs (real estate investment trusts), including Simon Property Group ( SPG ) and Vornado Realty Trust ( VNO ).

Tons of buzz the last few days about the fan that gave the Yankees back Derek Jeter's 3000th hit ball (which he caught as a homer in the stands). From the stories I have hear, the Yankees' security team was there quickly to usher the fan into a private location within the stadium. There have been numerous polls out asking fans what would they have done if they caught the ball. For the 23-year old Yankee fan with nearly $200K in student loans outstanding, he never hesitated to just give it back, asking for nothing in terms of monetary compensation. The organization rewarded the fan with luxury box tickets for the rest of the season (including playoffs), along with signed baseballs, bats and jerseys from the Yankee captain Derek Jeter himself. Now on the surface this sounds like a great reward and nothing someone should be complaining about. In my opinion, however, he made a big mistake not taking at least a day to gather himself and look at his options.

In the last couple of days, memorabilia experts have estimated the ball could have fetched $250K or more in an auction, considering he is the only Yankee to ever collect 3,000 hits (which is one of the most important milestones a hitter can reach). The person that caught the ball was there with his dad, who must have gotten caught up in the moment as well. As luck would have it, now comes word the guy who caught the ball may have to deal with the IRS for the various rewards given to him by the Yankees. The NY Times is estimating the face value of the tickets to the remaining 32 regular-season games at Yankee Stadium are worth anywhere between $44,800 and $73,600, putting a potential tax bill amount of $14,000 on the table. That's right - in the end, the fan's gesture of good will may well wind up costing him a small fortune.

The lesson to be learned here is that "sleeping on it" for a night is always a good idea. In a similar fashion to the "lucky" Yankee fan, lottery winners are often overwhelmed by their luck and make reckless financial moves without really thinking things through. It's not hard to find cases of lottery winners declaring bankruptcy and undergoing other hardships as time goes on. The worst thing to do is make quick decisions without realizing what exactly your options are. If the man who caught Derek Jeter's ball was afraid of holding on to the ball, he could have made a deal for the Yankees to maintain possession until he decided what he wanted to do with it. Is he regretting his decision today? He'll probably tell you no, but when those bills for his student loans keep showing up (along with a potentially huge tax hit), he'll be reminded each time what he should have made a different decision.

One more thing to add to yesterday's discussion on social security, it appears Washington is using social security payments as a political football when it comes to finalizing a budget deal by Aug. 3. The latest threats from President Obama are that social security checks may not be sent out Aug. 3 if a deal to raise the debt ceiling is not in place by Aug. 2. Again, the political drama never ceases to amaze. I can not stress enough my message that every person reading this needs to look at the government as providing the least secure retirement option. As we mentioned yesterday, there is potentially a new way being considered to track consumer prices, which will not be favorable to those collecting social security benefits - just the latest in a long string of events suggesting social security may be on the outs.

If you are going to build wealth and not have to rely on Washington for your main retirement money source, you will need to adopt the mentality of consistently buying assets that produce income. This is what the rich do. Sure, they like to buy material things like everyone else. They just tap their income streams to pay for it, not go in credit card debt to fulfill their material desires. A great way to bolster your nest egg is to buy quality dividend-paying stocks that consistently raise their dividend payouts. Companies are much more generous in terms of sharing their profits these days, which provides investors with a great way to hedge the inflation in personal costs (gasoline, food, etc.).

The best thing we can do as individual investors in the mean time is look for opportunities where we receive consistent income sources (dividends) from the companies who can best weather the economic storms ahead. You can count on Dividend.com to be your guide in that arena. As always, you can find all of our current recommendations on our industry-leading Best Dividend Stocks List .

Thanks for reading, and I'll see you tomorrow! P.S. Please pass this e-mail on to someone you think can use some financial motivation as well as being kept in the financial news loop that could affect them. Thanks again!

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 OMX Group, Inc.

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This article appears in: Investing , Stocks

Referenced Stocks: CAT , CF , CLF , CMI , COF

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