It looked like we were headed for another day of losses, until a
report from report from FT.com saying that EU finance ministers are
looking at ways to co-ordinate the recapitalization of banks
(European version of TARP?) was able to get the indices back into
positive territory. Judging by the action once today again, you saw
traders trying to dip their toes in the water with the recently
lambasted high-beta momentum stocks.
Some of the formerly high-flying momentum stocks have fallen
30-40% in the last month alone. Traders are sitting on some serious
trading losses out there (not unexpected when momentum stocks
collapse as quickly as they have recently). My advice for traders
sitting in losing positions that have only gotten worse is to
consider biting the bullet during market spikes like we saw late
today, and not risk tanking one's portfolio totally. Things can get
really dicey when rallies are short-lived and overhead resistance
becomes even greater (stocks gaining less and less on any up days
this equates to "game over" for many traders). Clearly the volatile
market environment makes trading more difficult than ever - which
is why we advise people to stay away from trading altogether.
For dividend investors, we are seeing lower prices for some
marquee brands, thus higher dividend yields will result. However,
we prefer to focus on quality names that have been
pullback-resistant in this environment. Of course, we'll begin to
reconsider some of the well-known names that have been beaten up
lately once we sense the downside action has run its course.
The early buzz today was German banking giant Deutsche Bank (
pulling its earnings guidance altogether
. The market yawned for the most part on this news, as the stock
has already been beaten up for months. We may see the same reaction
for other financials that begin to fess up to impending losses.
We saw a lot of focus on Morgan Stanley (
) as well, as potential solvency rumors continue to run rampant
with that company. Morgan Stanley, as well as many of the
financials gained strongly in the last hour on the FT.com story I
mentioned above. A couple of early Wall Street downgrade calls had
stocks like Lorillard (
) and Avon Products (
) trading lower for much of the day, but AVP did manage to climb
back into the green by the close. Avon is a good example of a
well-known brand that looked good 15 points higher and yet still
has little buying interest with a near 5% dividend yield. We feel
there are better names to own with just as attractive dividend
yields, so investors may want to wait for stocks like Avon to show
some stabilizing before even considering the stock for one's
portfolio. Lastly, commodity stocks were able to finally muster a
bounce. Freeport McMoran (
) gained $2 after recently seeing the share price cut in half over
the last three months. Also, the good news for equities didn't
translate for gold (
) prices as the yellow metal once again moved back down toward the
$1600 an ounce price level.
Dividend Stock Downgraded from Recommended List Today
Be sure to check out
today's post detailing our downgrade
if you haven't already. We removed a big-name stock from our
recommended list because we prefer some higher-yield names.
The "Bankruptcy" Trade Lure
We are seeing another stage of what I like to term "Bankruptcy
Stock Fever" begin to develop. There are two variations of this
trend. One is trading stocks that have already said they will file
for bankruptcy, but their stocks are still technically trading.
Blockbuster was a recent example of this type. Then you have the
"they could be next" batch of names (ones everyone is assuming will
file soon). The favorites in this group include Eastman Kodak (
) and AMR Corp (
) (formerly American Airlines). No one knows for sure if these
companies will be ready to file bankruptcy any time soon, but
looking at long-term charts of the stocks, such news wouldn't be
surprising to anyone.
Unfortunately these scenarios bring in the "rubberneckers" that
can't help but look at these stock price train wrecks. Instead of
delusions of grandeur about catching the next Ford Motors (
) (which narrowly evaded having to file for bankruptcy), I want you
to realize that the vast majority of these kinds of stocks will
never climb back out of their downward spirals. These types of
trades are extremely difficult to pull off. My best advice is to
move along. There's usually nothing good to see when stocks are
Increasing Your Career "Dividends"
Many people today are working subpar jobs, while others are
struggling to get back into the workforce at all. Your career is
the biggest core of your financial foundation, and whether you are
just starting out or in the later innings of employment, the need
to get as much out of your job income-wise is enormous.
You can equate getting a raise to seeing a dividend increase
from a company you own in your portfolio. Never take your eye off
the ball when it comes to achieving the highest salary you possibly
can. The best way to keep your salary rising? Make yourself as
irreplaceable as possible. Also, be sure you are in an industry
where the advancement process is clear to understand. The question
of where you can go with the gig you are pursuing should be
paramount to any interview or networking situation. Don't ever be
shy about knowing where all roads could lead. When you look at your
career (or even back at it if you are retired), you will see that
most successful people got to where they wanted with little help
from anyone else. You must remain an independent thinker throughout
life and always have a back-up plan is if things take a sudden
A Career Second Act?
I have heard some tough stories of people with families losing
their jobs and not knowing how to rebound or where to even start.
Once you get over the shock of losing a job, or even being forced
to come out of retirement, be sure to frame all of your past work
experiences and relate them to any new opportunities you pursue.
Sometimes, you'll also need to consider settling for a lower
initial salary in order to get your foot in the door.
The idea of getting a job and settling into cruise control
simply won't work anymore. Gone are the days of making copies and
"looking busy," so realize it is all about productivity these days.
It'll be a tough adjustment for some, but that's the reality of the
modern work environment. Remember, replacing lost income is not
just important for your bank account, but also to improve your
state of mind.
Income, Income, Income
At Dividend.com, we maintain our focus on the best
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.
Stay tuned and be sure to look for
member alerts along the way. Don't count on the government or your
employer to set you up for a remarkable retirement. Take control,
do your own research, and achieve your goals yourself!
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