The market was looking to rebound after a tough first day of the
week yesterday. We didn't get much of a catalyst coming from the
markets overseas however, but we did manage to close the indices
higher at the end of the day.
Looking at today's headline names, positive Wall Street analyst
comments had shares of JP Morgan (
JPM
) and Hershey Company (
HSY
) higher, while cautious comments led chemicals giant Dow Chemical
(
DOW
) lower. Gold-mining shares were quite weak with the price of the
yellow metal spending much of the day in the red. Leading the way
lower were shares of Barrick Gold (
ABX
), Agnico-Eagle Mines (
AEM
), and Newmont Mining (
NEM
). Lastly, shares of Best Buy (
BBY
) were active late on reports the company may be hiring an advisor
for a possible buyout scenario.
Chasing What's Green
We continue to see well-known brands get more and more expensive
on a valuation basis, as traders/investors spend their days looking
to put money into stocks that are trading in the green on weaker
market days. From a long-only trader's strategy, I understand the
approach, but if you are looking at risk/reward from a long-term
standpoint, things could backfire.
We've seen a similar problem with REITs, whose current yields
are near historic lows. We may have been a bit too careful
regarding the REITs, as some of the names have levitated higher
despite our cautiousness. In a world that is starving for income
yield, investors are walking a fine line with stocks that are
seeing yields push well below 3% and even 2%. If and when there is
a reversion to the means, chasing low yields will look like a
reckless portfolio strategy.
When you lock in to the idea of needing to see day-to-day
performance, you are setting yourself up for likely
disappointments. Instead, I suggest scaling into quality dividend
names that have come down in price, affording better long-term
entry points. It's up to investors to decide which way their
investing style will ultimately go. If you are day-to-day, then it
will be about chasing the flavor of the day - and being glued to
your television set to see what the next piece of breaking news
will do to your positions. I've been there and done that, and I
would certainly advise against it.
Dividend Stock Removed from Recommended List
We removed another dividend stock from our
Best Dividend Stocks List
this morning. We still like the name, but would wait to add new
money to the shares for now. Check out the name we downgraded along
with a full explanation
here
.
Income, Income, Income
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income-producing investments the markets have to offer during time
of heightened volatility. We want to make sure we have only the
most pullback-resistant names on our
Best Dividend Stocks List
. Also, if we see the market putting in what looks like a decent
bottom, we will be prepared to scale up the list of stocks we like.
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Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
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.