Judging by the market's one day reaction to last evening's first
Presidential debate, the market is embracing the idea of a
closer-than-originally-expected race. Of course, it's still early
in the election process as far as debates go. I would imagine the
debate swings will be as volatile as the markets.
Getting back to the market picture today, monthly retail sales
took over the early headlines with stocks like Gap Inc. (
), Wal-Mart Stores (
), and Target (
) seeing a positive reaction to their monthly results. On the
flipside, we saw some selling in names like Ross Stores (
), Kohl's (
), and PetSmart (
). We saw an interesting downgrade this morning of a couple of
high-yielding mortgage REITS, namely American Capital Agency (
) and Annaly Capital (
Looking at sectors that are moved today, coal-related names
gained, with stocks like Peabody Energy (
) and Consol Energy (
) leading the way higher. Casino-related names went in the opposite
direction, with stocks like Wynn Resorts (
) and Las Vegas Sands (
) ending lower.
Dividend Stock Removed from Recommended List
We removed another dividend stock from our
Best Dividend Stocks List
this morning. We still like the name and its yield, but would wait
to add new money to the shares for now. Check out the name we
downgraded along with a full explanation
It's funny how some people believe investing has gotten much
easier these days, just because the platforms to put money to work
are easy to access (log on to your online brokerage account from
anywhere on any device). In reality, making transactions simpler
doesn't make investing decisions any easier. And although you now
have access to much more research, both free and paid, finding one
style or publication that you feel great about can be very
Investors want to know their money is safe, but they also want
to be in the know if someone has a hot tip on some fast money.
That's an unfortunate part of human nature. The casino mentality in
the markets is just as prevalent as ever.
As a result of these and other factors, I'd argue that today's
investing environment is just as difficult as it's ever been. Look
at the recent carnage occurring in stocks like Hewlett-Packard (
), considered by many just a few years back as a must-own,
diversified way to play the tech economy. After all, the company
had what many considered to be top management. Yet the company lost
its way, and Apple (
) barreled over H-P (and other PC/device makers) with ease. I fear
that Hewlett is probably still sitting in many long-term holders'
portfolios, and will likely remain there indefinitely. Why? Because
most investors wait too long to sell, and figure the worst has
The speed at which entire industries are being transformed these
days makes the art of investing quite a complicated venture. You
must stay on the ball and have at least one reliable research
source to help keep you abreast of all the comings and goings. Just
as importantly, your research sources shouldn't be waiting to
scream "fire" after the damage has already been done.
Today's generation is unique in that younger people are not
anchoring down as much as prior generations would. Blame it on the
lack of job opportunities perhaps, but getting married, buying a
home, and having kids are things that young folks are pushing back
further than ever. Of course, there will be investment
ramifications stemming from these trends, among others that
continue to take hold.
I ask everyone who is investing their hard-earned capital (no
matter what assets you're buying) to pay close attention to the
world around you, and not lose sight of how changes can destabilize
one's nest egg. Stay flexible and above all, remain
You Really Only Get One Shot
A friend of mine recently told me about a commercial property he
was considering buying. The property had a superb location, but
borderline ROI numbers (known as "cap rate" in the real estate
world). In other words, there wasn't much room for profit after
monthly expenses were factored in.
The seller was asking a high-ticket price, so my friend wanted
to make sure he could work the sale price down as much as possible.
He held off on making an offer, hoping the seller would capitulate
and come down to a more reasonable price. Thus, he remained on the
sidelines for a while and patiently waited.
Unfortunately, to his dismay, my friend recently picked up the
local paper and found out the property he'd been looking at was
being acquired by a local group (the price was not disclosed). I
asked my friend why his realtor wasn't aware of the potential deal
for the property they'd spent so much time investigation,
especially since the listing agent for the property worked in the
same office. My friend expressed extreme frustration and honestly
have no idea what happened. Looking back on the process, my friend
noted a potential red flag he failed to notice initially: the
sporadic follow-up he would get from his realtor.
Sometimes calls and emails were returned, sometimes they
weren't. Follow-ups ranged anywhere from a few minutes to a few
days. Maybe it shouldn't have been much of a surprise that the
property was bought without his realtor realizing it!
Regardless, the experience left my friend with a bitter taste,
and the notion he would never work with that particular realtor
again. Ask any successful realtor, and they will tell you they
build their entire business on the back of great referrals. You
see, in sales, the margin for error is very thin. You can try your
best as a realtor and a deal could still fall apart, but most good
clients will recognize the great effort made, and will almost
always retain the realtor for another crack at something else.
When it comes to evaluating realtors or other business people, I
have found in my life that if I have to defend someone more than
once, it's probably the case that a real problem does actually
exist. In other words, anyone can slip up once, but if it becomes a
habit, the outcome of working with someone is likely to not be
good. My gut feel for these situations has saved me from entering
into plenty of partnerships that would've likely been just a waste
of time. Time is precious, so you need to deal exclusively with
individuals that get things done, follow up with you when they
should, and most importantly, get results!
25 Years of Dividend-Increasing Stocks
We recently updated our list of dividend stocks that have been
paying out dividends for 25 years or more. Be sure to check out
the latest list of names here
Dividends Really Matter
Financial blog DailyReckoning.com recently took a look at the
difference dividend payouts made in the overall return investors
saw throughout the prior decades. Here are some of the
- The Nasdaq is down 28% since the end of 1999. Even the "blue
chip" S&P 500 stocks are down 15% during that time frame…until
you add back those "boring" dividends. With dividends included, the
S&P 500′s 15% loss flips to a 6% gain.
- Without dividends, the S&P 500 index would have produced a
loss for the 25 long years from August 1929 to August 1954. Then
again, without dividends, the S&P 500 produced a 5% loss during
the 13 years from September 1961 to September 1974. But with
dividends included, the S&P's loss became a 46% gain.
- Over the course of the last half-century, dividends have
contributed more than half of the stock market's total return -
56%, to be exact.
Of course, you can't discuss the potency of dividend investing
without making mention of how awesome compound returns are. I can't
stress enough the power of compound interest: you take a small
amount of money and turn it into a large amount over time. Finding
the right companies at the right price points which not only grow
earnings, but also grow their dividend payouts as well!
New Watchlist Article Out Today
Be sure to check out our weekly Top 50 High-Yield Watchlist
Names post that is out today, exclusively for
members. This list gives readers a good idea of what stocks we're
watching behind the scenes here for potential upgrades.
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Thanks for reading, and 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