Market Wrap-Up for Nov.21 (MS, C, DB, GLD, VNO, SPG, more)

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As you can see by today's nervous market reaction to the bipartisan "Super Committee" failing to agree on a U.S. debt budget, regulators are struggling to decide which of the special interests will see smaller pieces of the budgetary pie. This latest governmental delay certainly won't help Congress' already terrible approval rate.

A failure to pass an agreement would result in $1.2 trillion in automatic spending cuts across much of the federal budget starting in 2013. These cuts would be evenly divided between defense and non-defense spending.

At this point, no one is certain how the situation will play out. Potentially, a scaled-down version of cuts could be implemented as a short-term patch. The risk, of course, is that failing to come to a long-term resolution may put the U.S. at risk for another debt downgrade. If you remember, S&P cut its "AAA" rating on U.S. debt for the first time ever back in August. Moody's or Fitch (the other two big ratings agencies) could possibly decide to follow suit.

We'll be watching these events closely and continue put great emphasis on having the best names for investors to consider putting capital in - regardless of the economic situation. We made it through the market meltdown of early 2009 with only six names on our Best Dividend Stocks List , and any investor that continued to average into those names have been rewarded handsomely for avoiding trying to time the market.

As for the individual names moving in the markets today, investors took aim at the financial sector for some of the early selling (as has been the case whenever the economic headlines turn negative). Leading the way lower were shares of Citigroup ( C ), Deutsche Bank ( DB ), and Morgan Stanley ( MS ). Wall Street analyst downgrades out this morning also made an impact, pushing down several names, including REIT plays Vornado Realty Trust ( VNO ) and Simon Property Group ( SPG ). Drug retailer Walgreen Company ( WAG ) also ended down following negative analyst comments as well. There was no where to hide, including Gold ( GLD ), which saw the price of the yellow metal fall over $45 an ounce to close well below the $1700 an ounce mark.

What Kind of Businesses are You Investing In?

We just watched the IPO of a company called Angie's List ( ANGI ) this past week and the company's stock opened up at $18 a share, valuing it at nearly $900 million. On the surface, that valuation doesn't seem too far out of whack. But when you pull up the numbers, the story gets more interesting.

In 2010 and the nine months ended September 30, 2011, the Angie's List's revenue was $59.0 million and $62.6 million, respectively. In the same periods, Angie's net loss was $27.2 million and $43.2 million. And this is for a company founded all the way back in 1995. That's right, the company is somehow still not profitable after 15 years!

There are plenty other companies that have recently had an IPO or are set to debut in the next year or so, many of which will be showcased as potential "home run" stocks for investors to consider. It's not impossible for companies that lose money for years to suddenly turn on the profit engine, but those are the exceptions to the rule. Amazon.com ( AMZN ), for example, lost money for years but turned the corner and has never looked back.

Unfortunately the reality for investors is that many of these unproven companies/business models will eventually flounder over time. Remember the China-based web plays we pointed out to investors back in June? Well the Facebook of China called Renren ( RENN ) is down to $4 and change from the IPO high of $24. Also, the Amazon.com of China, Ecommerce China Dangdang Inc. ( DANG ) is down to less than $5 from its IPO high of $36.

You don't want to ever have to look back and say to yourself "I can't believe I actually bought that stock." Whether Angie's List or the China web plays we just mentioned ever prove to be good investments or not, it's always scary to know a company has been around for more than a decade, but is still not profitable. Many investors have been seriously burned by hot new IPOs over the years. Consider this fact as you analyze how you commit your hard-earned capital over your investing lifetime.

Our "Beat The Markets with Dividend Stocks" eBook is Coming This Week!

We're putting the finishing touches on a brand new eBook (nearly 300 pages!), slated for release later this week. In this book, we look ahead to 2012 and what could lie ahead for dividend investors. A $39.95 value, the eBook will be a free download for paid Dividend.com Premium subscribers.

Beat The Markets with Dividend Stocks contains a full economic forecast for 2012, including in-depth analysis on 65 of the biggest dividend stocks out there. It's a great way to get prepared for your investing next year. We'll be sure to alert subscribers as soon as the book is available!

I hope everyone had a chance to check out our Dividend.com Premium 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 .



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: AMZN , ANGI , C , DANG , DB

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