Stocks were once again spiking today, as we prepare to head into
fourth quarter earning season, which begins in earnest next week.
Looking at our past data, we saw a similar event happen going into
third quarter earnings as well. The markets moved sideways during
the first two heaviest weeks that quarter, followed by a move
Looking at today's spike (which likely caught some short-sellers
flat-footed), we once again noticed the recently beaten-up sectors
catching some higher bids. Commodity plays like Freeport McMoran (
) and BHP Billiton (
) were up nicely early on, but did close off the day's highs as the
market pulled back by the close. Over in the financial sector,
Wells Fargo (
) and J.P. Morgan (
) were pacing the gains. On the earnings side, we had mixed results
with PepsiCo (
) gaining early and finishing higher, while shares of Alcoa (
) finished in the red following their disappointing earnings
results. Speaking of earnings, PVH Corp (
) and Johnson Controls (
) both released positive commentary about their upcoming earnings
releases, and both pushed higher for much of the day.
The Dow at one point today was up 1,100 points over the last 5
trading sessions, starting from last Tuesday's afternoon lows. We
think it would be wise for investors to use the recent spike as an
opportunity to trim some of the under-performing stocks that may be
causing damage to one's overall portfolio performance.
Enhancing Shareholder Value Through Job Cuts
Executive search firm Heidrick & Struggles (
) announced a restructuring initiative this morning. Part of
management's plan to strengthen the company and better position it
for long-term success includes a 10% reduction in its global work
force. I recently mentioned that corporate America will continue to
get leaner and attempt to squeeze more profits out of declining
sales. This news follows
my post yesterday
on how to develop a contingency plan, should layoff news come
unexpectedly in your own work life. Without question, the world is
in a readjustment period when it comes to higher unemployment
globally. In my opinion, you will continue to see an intensified
focus on job creation even beyond next year's major elections.
Learn to Engage or You Will Starve
A few days ago, I stopped by my local eye doctor's office to
pick up some new eyeglass cleaner and while I was there, I struck
up a conversation with two opticians. One woman has been in the
eyecare business for 31 years and was buzzing all around talking
about the business, while the newer young lady was there, but not
nearly as engaged in the conversation. I'm guessing when it comes
to compensation, the opticians are part salary, part commission in
that particular office.
Here's the thing, and I see this a lot with younger people,
their ability to carry conversation is often very lacking. Now we
have all been "green" in our fields at some point in our lives.
However, when sales are part of how you will be making a living,
you'd better learn how to engage as soon as possible.
We often hear about employers turning to younger workers to save
on salaries, but when you have an experience as I had, you can
certainly see why it is not too smart to dismiss the value of
experience in the work place. I worry about how today's new college
graduates will fare, given a certain lack of business conversation
skills. We know many can communicate well within their own inner
circle (even though texting rather than talking has become the
dominant way of communication these days).
I remember when I was growing up, I'd help sweep out my dad's
barber shop. Customers would often tell me how long they'd been
coming to that same shop, and how they remembered how excited my
dad was when I was born. You see, conversation is a natural part of
many service businesses, not just sales. To this day, you still
need conversation skills to go along with your hairstyling talents.
Sometimes the foundation of success can begin with as little as a
smile and a good personality!
Tail Wagging the Dog
We are seeing more and more attention paid to the leveraged ETF
(Exchange Traded Fund) space as market volatility continues to
reign. Originally the fuss began when the markets were falling
lower. Pundits started pointing their fingers to trading in the
leveraged ETFs as a cause of the vicious drops in the market. Just
recently, we've begun to see arguments that markets are now being
manipulated higher, and with this, market-watchers worry the market
action will keep retail investors from having much confidence in
I have been vocal about the effects of leveraged ETFs, but the
resolution to this potential problem will be is still yet to be
determined. I can tell you this, traders who are trying to make a
living are frustrated with the vicious market moves and many have
described what they feel is the worst trading environment in years
(bulls and bears both struggling to make money consistently). While
this certainly can affect dividend stocks that we cover, if we feel
stocks are taken down with little fundamental concerns to match the
drop, we will not hesitate to put those names on our recommended
list. In the end, it will be the fundamentals that will carry a
company's valuation higher or lower. Yes, leveraged ETFs matter,
but for what our focus is on finding quality income-producing
dividend stocks, we will not lose sight of what the overall focus
should always be - a company's fundamentals.
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Thanks for reading everybody. I'll see you tomorrow!
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