Value investors have certainly busy today sorting through many
"sum of the parts" business stories. These anecdotes come following
the recent sell-off, claiming that beaten-up stocks are now
takeover targets (of course, the pundits fail to mention how poor
the fundamentals are for some of these "in play" candidates and why
any acquirer would be buying "damaged goods").
I certainly hate to sound ultra-bearish when the tape continues
to show green, but today's pundits have a very short memory. A
large number of stocks out there are trading 40-50% lower (or
more!) from their 52-week highs. We'd love to start upgrading names
that could be great holdings for investors, but we need to see
clear signs of a real turnaround first (as opposed to the umpteenth
time market or economic bottoms have been declared).
Looking at the movers in today's market, monthly retail sales
moved the tape in a positive way for the likes of Target (
) and Ross Stores (
). On the flipside, we saw some selling in shares of TJX Companies
). Positive Wall Street commentary helped move up shares of Ralph
) and Monsanto (
). Cyclical plays tied to the commodity and industrial side also
rallied, led by Joy Global (
) and Caterpillar (
). Financial laggards like Morgan Stanley (
) and Bank of America (
) managed to gain ground as well during the session. Shares of
) are moving lower after-hours on news the company news will pay
the US $199.5 million in order to resolve a suit related to the
False Claims Act.
Mortgage Rates Break Below 4% (Great, But Who's Even
If I have to read yet another story about how rates have hit
historic lows and may not go any lower, I'm going to scream. Rates
have been low, keep falling, and will continue to do so. Rates are
not the problem, however. The problem facing the housing market is
that the lending channels are frozen. Banks and mortgage lenders
are simply not interested in giving out loans at rates this low.
They've created a maze of obstacles that include poor selling comps
and high qualification standards. And good luck if you want to
refinance - you probably won't even get a call back! It drives me
crazy that major media outlets don't look past the surface of the
problems we face.
Gold Prices Have Every Reason to Rally, But Can They?
It's becoming clear that our neighbors over in Europe are
considering a printing press-like solution to their current
economic issues. If this is the case, and Europe repeats the
actions of the Federal Reserve in the U.S., it could set the stage
for a resumption of commodity price appreciation. Unfortunately, we
all know trying to conquer debt with more debt is ludicrous, but
when pushed to buy time, global leadership may not be able to
resist printing money.
If gold prices do not rally here, it also could be a sign that
deflation is coming home to roost faster than anyone was expecting.
You can print all you want (and there are many arguing that
printing more currency is the only chance you have to stave off
deflationary pressures), but lower demand is tough to change
overnight when people realize further spending only digs their debt
hole even larger. Debt is never more destructive than when
deflation takes hold. The products you are buying with borrowed
money fall harder and faster in value than is expected, yet debt
levels remain the same.
Steve Jobs and the Legacy Factor
The world lost one of its greatest technological innovators of
all time last evening when Apple founder Steve Jobs succumbed to
his battle with cancer. As news broke last night, friends shared
their favorite memories of Mr. Jobs and legions of Apple fans
posted tearful farewells. One tweet in particular about Mr. Jobs
jumped out at me:
"Born out of wedlock, put up for adoption, dropped out of
college after several months, then changed the world - What's
Pretty awesome tweet, I'd say!
Of course, most of us won't be able to change the world like
Steve Jobs (or Ghandi, or Mother Teresa, etc.) did. We all can make
an impact in our own lives, however, and create our own positive
legacies. I hope we at Dividend.com can help people understand a
better way to invest their money. In the long run, this sound
financial practice can be passed on from family generation to
Anyone that has been reading my newsletter for a while has
likely read about the term "legacy" and why it's important. Every
one of us has the ability to build the foundation for our future
family generations, and it doesn't take a lot of money to get this
process under way. Having more money to start with doesn't hurt of
course, but is not as much of an obstacle as you may think.
Almost none of us are born rich. The process of building on
early small successes, and turning them into big successes, is
what's truly valuable. Many of our readers have taken my "take
charge of your own financial destiny" to heart, and it's great to
hear your own success stories. I applaud you for that, and for
understanding that investing does not have to be complicated. Your
success stories make me feel really good about what we do here at
Dividend.com. Everyone has the ability to generate wealth, and
following our strategy will allow you to get the power of compound
interest behind you!
New Watchlist Article Out Today
Be sure to check out our weekly
"Top 50 Watchlist Names"
post that is out today, only for
members. Some high-beta dividend stocks will certainly be on this
list as we keep everyone up-to-date on names that are working
better than others in this current market environment. Our focus is
more on yield, so be sure to recognize the risk of buying
Thanks for reading, and I'll see you tomorrow! P.S. Please pass
this e-mail on to someone you think can use some financial
motivation as well as being kept in the financial news loop that
could affect them.
Be sure to visit our complete recommended list of the
Best Dividend Stocks
, as well as a detailed explanation of
our ratings system here