Market Wrap-Up for June 10 (ROK, CBRL, TM, STI, GM, PRU, more)

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The mainstream media has been spreading fear in the markets as of late. The comical thing about this development is how quickly pundits change their tune from week to week, usually based on what they are buying and selling at the time. Traders take short positions (betting the markets will go down) and suddenly the message turns very negative. Traders get long again, and the message shifts to how we're oversold and there are values galore out there.

I urge you to ignore the financial media noise, because it will never go away. It's about ratings folks, don't forget that. Your job is to stay locked into your own financial situation and avoid following the manic styles of traders. I am not trying to be a perma-bull, just a voice of reason. Many attractive dividend stocks have just become even more attractive after the recent selling. Not all stocks look good, but we continue to work hard to identify the best possible investments for the coming months and years. As always, you can find all of our current recommendations on our Best Dividend Stocks List .

Part of the recent economic fears has to do with the huge selling in China momentum stocks that have been big winners for traders, but have suddenly come under suspicion regarding their accounting practices. This kind of development will spook traders in a heartbeat, and the media will push this uncertainty onto the overall market. Look at the shock expressed by some market watchers at LinkedIn ( LNKD ) shares falling well below their IPO debut price. These pundits say "bad sign for the markets." Really? We should all panic when a stock trading at nearly 2000 times earnings sees its price dropping?

As we take a look at today's action, selling took place pretty much across the board. Some conspiracy theorists argue Wall Street is pushing on the QE3 string (basically a third round of printing money) with the recent market weakness. Regardless, traders got negative calls out this morning on the likes of Rockwell Automation ( ROK ), Cracker Barrel ( CBRL ) and SunTrust Banks ( STI ). The financials remain weak (we continue to avoid much of the sector, except for a few Canadian-based financial institutions we currently recommend) with sellers coughing up shares of insurers, including Prudential ( PRU ) and Metlife ( MET ). Another tough day for automakers as Toyota Motor ( TM ) gave a gloomy forecast to investors, with selling hit shares of Ford ( F ) and General Motors ( GM ) as well.

Changing the subject a bit here, anyone who thinks there are easy personal finance formulas to plug in and everything starts to work are just kidding themselves. There are wonderful sites out there like Mint.com which help you get a handle on your expenses, but their business revenue comes from vendor relationships that are all about finding you better rates with various credit card/loan sources. Technically yes, it is a better deal if you can find better rates, but the reality is that spending money on material things are the last thing that can help you build long-term wealth. Let's look at some anecdotes that stand in the way of many people gaining financial independence. Here are four themes from the first part of a 2-part series.

1. The "Dilly Dally" effect - Too many of us are always putting off necessary changes on how we manage our money. I talk about automating money from your paycheck into a brokerage account each week so you are positioned to get money to work for you in income-producing dividend stocks. That's one great way to avoid putting off saving.

2. Outspending - We all know people who are first in line to buy every new tech gadget or fashion piece. Unfortunately, spending money is a type of addiction for many people. Bad habits like these are built up over time and are difficult to break. If you are around a group of people that worship at the altar of Mercedes, Tommy Hilfiger, and Polo Ralph Lauren, it's tough not to feel "left behind." Friends and family have a big impact as to how you will perceive money.

3. Slow to Pay off Debts - Spending with plastic is easy, but once the "minimum due" invoices come in, you just continue the process of extending your debt each month. Credit card companies just love this practice, and you become a slave to their process in no time.

4. Trying to Get Rich Quick - Often times this is the disaster event that knocks someone's finances for a loop. The no-brainer business or stock investment from a friend who promises they have the golden ticket to riches is all too tempting for many to resist. Money experts know that the only sure way to riches is to put compound interest to work for you. When I was on Stu Taylor's Equity Strategies radio show a while back, we discussed the options if you are older and have not saved a dime yet. Let's say you just turned 50 and you haven't saved a dime yet. Believe it or not, you'd still have plenty of time to build a solid nest egg. For instance, you can start maxing out a Roth IRA contribution ($5K/year currently, but in addition to the "standard" contribution limits, taxpayers age 50 and over are eligible to make a Roth IRA catch-up contribution of an additional $1K/year). If you were to invest $5K per year for every year in your 50s, each $5K you invest would turn into more than $40K after 20 years (Based on an historical 11% average annual return for dividend-paying stocks). So you see, it's never too late to get started as long as you're investing in the right dividend-paying stocks!

One of the knocks on my "Be a Dividend Millionaire" book (based on some Amazon reviews) is that it was too simple for some already-sophisticated investors. Those who were critical of the book missed the overall message regarding the many essential elements you must have in place to become a dividend millionaire (how to save money, proper ways to budget, how to put money to work in dividend-paying stocks, etc.). You need to look at the overall picture of your finances and develop sensible routines with your money. In the end, it doesn't matter how well you invest if you're living beyond your means!

Be sure to catch up with our latest watchlist updates this weekend on Dividend.com Premium , including reports on earnings/story stocks, analyst upgrades/downgrades, dividend ETFs, and much more. And as always, you can view our current recommendations on our industry-leading Best Dividend Stocks List . And if you haven't already, be sure to check out "What's New on Dividend.com Premium" post we published recently to get up to speed on all the great new enhancements we've made to our service recently.

Thanks for your support everybody and thanks for reading my newsletter too! Please pass this on to anyone you think we can get inspired and educated about building wealth and using common sense to do so.

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: CBRL , F , GM , MET , ROK

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