Market Wrap-Up for June 14 (JCP, BBY, LO, WYNN, MA, DD, CAT, more)

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Without much of a clear reason, except maybe being a bit oversold, the indices were all up strongly this morning. We did some better-than-expected economic data out on retail sales, but the data has been highly volatile the last few months, so I wouldn't put much stock in the latest results.

Electronics retailer Best Buy ( BBY ) surprised some market watchers with its earnings results this morning, and with that shares moved nearly 5% higher by the close. Wall Street analyst upgrades moved names like Wynn Resorts ( WYNN ), Nordstrom ( JWN ), and State Street ( STT ) to close in the green. Financials managed to stand out yesterday in a mixed tape, and did well in today's action. MasterCard ( MA ), Franklin Resources ( BEN ), and Prudential ( PRU ) led the way higher. Cyclical names like DuPont ( DD ) and Caterpillar ( CAT ) took in the rally as well. We saw a huge move for shares of retailer J.C. Penney ( JCP ) on news the company has landed Apple Retail Executive Ron Johnson, who pioneered the success of Apple's ( AAPL ) retail stores. Lastly, tobacco-maker Lorillard ( LO ) gained nearly 12% on a potential positive outcome regarding an FDA decision on menthol cigarettes.

Let's dig into the second half of our 2-part series highlighting reasons why people fail to achieve financial independence.

1. Being Clueless About Money Issues - This shortcoming is a trap that tends to affect people with a high net worth more often than you may think. Often times, people inherit bad financial sense from an older parent or relative. It's sort of the "it worked for them, why should I question it?" mentality. The recent Bernie Madoff scandal illustrates this point to the tee. Many wealthy people were blind to the problems in Madoff's scheme that should have raised obvious red flags. What really struck me was that his clients were not allowed to question Bernie Madoff about his strategy or anything related to his investments. If an advisor EVER requires conditions like those to handle your money, run - don't walk - out of his or her office and never go back. The other big red flag was that Madoff's investment returns were as steady as they came, regardless of the market's returns. No one who operates "on the level" in this business will be able to achieve those kinds of results. Having a quality money manager is all well and good - just make sure you understand where your money is going.

2. Investing in Areas You Don't Understand - Ignorance is a huge problem for individual investors. Whether it's being a silent partner in an business you know nothing about, or buying high-risk penny stocks, investing money in ares you don't understand will almost always come back to haunt you. Far too many investors think buying businesses and having others run them will be an easy way to grow their financial net worth, but many don't realize businesses tend to do better when the owners are more hands-on. Passive investing is very over-rated. There are tons of books that make it sound so simple though! Buy a business, hire people, show up at the end of the day and count up the register. Ha! If it only was that easy. When it comes to financial advisors pushing new investment products, you need to do your own due diligence so you are not being sold products that are commission-friendly instead of positive returns-friendly.

3. Letting Fear Paralyze Your Investment Goals - Much of the blame for this shortcoming lies in focusing too much on the day-to-day (or minute-to-minute) happenings in the markets. Watch any of the big business channels (CNBC, Fox Business, etc.) and you will be fed numerous storylines about why now is the time and now isn't the time to be in the markets. We always advise readers to down the volume for the most part on the various pundits that grace the screen on any given market day. Doing nothing is as risky as doing something, especially when the banks are paying little in the way of interest (savings accounts, CDs, etc.). Your wealth will continue to deteriorate if you don't start to acquire income-producing assets. Taxes and inflation (despite what the government says, prices ARE higher for many everyday items) will chew up accounts of the savers.

4. Ignoring Reality - You don't have to look far to see the mess many Americans currently face when it comes to real estate and foreclosures. Throw in a tough jobs market as well, and many are financially ill-prepared for the coming years. Facing a crisis head-on is the only way struggling Americans will be able to get back on their feet. Sometimes you have to rebuild and start fresh in life. You have to dig down deep. I know it's tougher to do than to say, but many have come back full-circle from huge financial setbacks. The more you want to help yourself, the more you will see that people will want to help you. Communication is a must for all that stand to be affected. Your spouse and especially your kids may not show their concerns all the time, but don't overlook how financial struggles affect them. The example you set during times of trouble will be what shapes your legacy - perhaps even more so than what you do once you've become financially successful again.

Dividend investors that are looking for income should not be distracted by the flavor-of-the-day headline grabbers. Instead, look for opportunities in companies that are currently on our Best Dividend Stocks List . Our main focus is on quality dividend names with attractive yields, and this should be the focus for all those that are hoping to build income for the long-term. We will continue to parse through our data to make sure only the names we like best remain on our recommended list. Remember, if we downgrade stocks from the list, it is not a sell call! Only in very rare instances will we advocate liquidating positions in a formerly recommended name. We just want to have the best names from a risk/reward standpoint on our recommended list for new money at all times. Investors should, however, utilize their own sell strategy in the event a company you own drops 25% from its 52-week high and there are company-specific problems that could cause additional significant underperformance for that particular stock.

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.

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: AAPL , BBY , BEN , CAT , DD

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