As we continue to watch the Fed and ECB commentary, wondering
where the next big move will come from, the only other thing that
should actually matter from an investment standpoint is company
In some cases, investors are putting any company cautions from
the likes of Apple (
) and Amazon (
) aside, as the chase for performance overtakes the need to see
stellar earnings results. In what was a light earnings day today,
shares of Franklin Resources (
) ended higher following
their earnings commentary
. Meanwhile, positive Wall Street commentary helped push stocks
like Colgate-Palmolive (
) and Phillips 66 (
) higher, while cautious analyst commentary moved stocks like
Abercrombie & Fitch (
), J.P. Morgan (
), PetSmart (
), and Eli Lilly (
Hold Your Applause
As I spent part of my weekend going over market data, I couldn't
help but wonder what the common mindset is for investors today.
I can tell you that Wall Street analysts do a good job
pretending to know every turn the market is about to take.
Predictions don't cost much, and we all know accountability is
essentially non-existent when a particular analyst re-issues the
same call over and over again until it finally works. For example,
I'm seeing the same old analysts calling for higher interest rates.
This prediction is nothing new, of course, and is an easy call to
make when rates are basically at 0%.
Here's the thing though. Many of the well-known market
prognosticators had been calling for higher rates when rates broke
below 4% on the 10-year Treasury Notes, then again when the 3% mark
was eclipsed, and certainly even more so at 2%, now most recently
1.5%. At some point these analysts will finally "nail" this call
and be applauded mightily for it. The same concept holds true for
calling market tops or bottoms, and so on.
Such is the unfortunate reality of mainstream business media
coverage. We can't do anything to change it, but from time to time
we'll remind our readers as to how the game is played.
Why Investors Are Losing Interest in The Stock Market
Another quandary regarding the markets recently involves the
declining trading volume we've seen over the past few years. Every
so often, the business media will float the question out there,
wondering why investor interest in the markets is at such low
levels - as if they don't already know the answer.
Well, here's my take on the slowing market interest. It all
centers around how the markets are covered. The business media
focuses almost entirely on traders, and as I've said many times,
that the track record of people making a long careers as traders is
poor. Still, the TV segments tend to center on what is moving at
this very moment, and how traders should maneuver their way through
every hour of the day. The script every day is simple: cover
anything that is "actionable" as breaking news, find two analysts
that may disagree on a particular topic and keep the risk tolerance
high. After all, the markets need new players to come in for the
easy pickings when someone's trade discipline eventually wipes them
Look at all the shilling that took place for the whole social
media space as companies like Groupon (
), Zynga (
), and Facebook (
) were set to IPO. That's not to say we'll never see any success
stories result from social media, but again the retail investor
that got sucked in has seen nothing but losses in this arena so
So here I sit, worrying that some of the quality companies we
follow in the dividend space - companies that actually make money -
could be getting too frothy from a risk/reward standpoint. If I was
willing to just follow the script and tell readers there is no
risk, I could join the business media party that goes on with every
sound rally (like when an ECB or Fed official says they will do
whatever it takes to keep the economy/markets afloat). But I'm not
willing to do that. I will continue to focus my research on
fundamentals, and listen closely to what companies are saying in
their conference calls.
One thing I learned in my many years in the markets is to never
fight the tape. As a trade, this concept is even more important.
However, when it comes to building wealth for the long term, the
focus has to be on more than just the next 24 hours, week, or even
several months. Our purpose continues to center on providing
investors the best possible long-term dividend investment ideas.
That's all we do, and I think we do it better than anyone else out
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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!
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, as well as a detailed explanation of
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