It was a snap-back Monday for the U.S. averages, as traders dug
their heels in and bought their share of high-beta stocks that have
been hit hard this past month. I certainly don't miss the days of
waiting for those bounces, whenever I let my trading discipline
down (which happened less and less after learning some crucial
Looking at today's action, the bounce did not help the earnings
stories of Lowe's (
) and Campbell Soup (
). On the flipside, positive analyst commentary helped lift stocks
like American Eagle Outfitters (
) and Boeing (
). Commodity/Capital goods plays like Caterpillar (
), Deere (
), and Honeywell (
) also regained a bit of their losses from the past month or so.
It's too early to tell if today marks any significant bottom for
the averages, but I have more thoughts on what investors should be
contemplating at this stage of the game below.
Life After Facebook IPO
As Facebook (
) shares fell (down 12% by the close) and business commentators
backpedal about what went wrong with the IPO, life for dividend
investors simply proceeds as normal. The pomp and circumstance of
the IPO has passed and retail investors who bought the stock are
likely wondering, do I buy more, or do I sit pat? Most won't think
about selling at a loss, because human nature makes it very hard
for inexperienced investors to accept bad trades/losses.
The business media is frantically trying to make sense of
Facebook's early price weakness. Of course, the media won't look at
itself for making retail investors foam at the mouth about the IPO
in the first place. Instead, they're blaming Wall Street, the
underwriters, or the Nasdaq exchange itself for having trade
execution issues. Smart dividend investors will look back on this
story as just another lesson to keep in mind when they're tempted
to roll the dice on a hot new "can't-miss" IPO.
Following the recent wider market pullback, we continue to look
for more dividend opportunities. All the while, we're closely
watching our current picks to see if they still warrant new
investing capital. If we see danger signs for the business of one
of the stocks we recommend, we will not hesitate to say "sell"
altogether (although most of our downgrades are simply
What Should Scare Dividend Investors the Most
It's funny, we almost never get users e-mail us worrying about
markets when they are ripping higher, but as soon as the selling
stretches more than a few days, fear takes over. Ironically, it is
when the markets are ripping higher that we are at our most
uncomfortable position. You see, we are trying to avoid situations
where investors are putting fresh capital into stocks that have run
too far, too fast. No one usually likes to see us downgrade a stock
they own from the
Best Dividend Stocks List
, but we have to stick to a discipline that has worked well over
That's not to say that sell-offs don't concern us, but when we
feel our recommendations are positioned well, we look at the
pullbacks as more opportunity than anything else. Again, if stocks
we like are down on stock-specific news, that would warrant a close
look, but when the overall market is down, we are certainly not
rattled. When the job is building wealth over the long term,
day-to-day moves will look miniscule when you look back over your
Our job at Dividend.com is not to find individual trading ideas
and pump up investing as a sport. Instead, we see what we do as an
ongoing education process that we humbly feel includes ongoing
lessons for ourselves as well. All the while, investors pile up
dividend payouts month after month and see their portfolios climb
year after year, helped by the power of compound interest.
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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!
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here
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