The market was able to see a bit of a minor bounce today, but
the volume on these up days remains lukewarm at best. This is not
the type of environment you want to be making any "all-in"
Traders spent the day flocking to what were the most oversold
areas of the market, hence we saw commodity stocks pushing higher.
Giants like Freeport McMoran (
) and BHP Billiton (
) were able to catch a slight bid, but the long-term charts on
these names have been very damaged since the beginning of the year.
Commodity plays are notorious for slashing their dividend payouts
in the blink of an eye, which is why we've avoided the space for
the most part.
Financials were also another area some investors were hoping to
catch a bounce in today. Morgan Stanley (
) could be a short-term tell to watch if those beleaguered stocks
can stabilize. Again, the rallies in the financials have come on
lighter volume for the most part, so proceed with caution if you
are considering the sector. We are still bearish on most financial
Elsewhere in the markets, Nike (
) shares were up nicely after the company trounced earnings
expectations. V.F. Corp (
) was also up big, following a Wall Street analyst upgrade. In
contrast, it was a rough day for gold-mining stocks like Royal Gold
) and Newmont Mining (
) as gold prices plummeted through key technical levels. Gold
prices had their biggest one-day fall since 2006 and silver (
) prices did no better, seeing the biggest one-day drop since
New Dividend Stock Recommendation Today
As the market continues to try and find its footing, we remain
focused on our
Best Dividend Stocks List
to make sure we have only the best current investment opportunities
listed as we find them. Speaking of which, we upgraded a big name
back on to our recommended list earlier today, so be sure to check
our post detailing the upgrade
if you haven't already.
The Phenomenon of Everyone Owning the Same Hot Investment
I'm sure most of you saw my multiple warnings about Gold (
) in the short-term this week. All along gold's meteoric rise, I've
maintained that gold is merely a trade - not a viable long-term
investment. The yellow metal's big decline this month further
solidifies my view.
To that point, it's always interesting (and sometimes dangerous)
when all members of a group seem to love the exact same thing. You
see this phenomenon take hold in the sports world when a group of
fans gather. Good plays are often described as amazing and bad
performances are masked with "good effort though." I'd imagine the
same thing has been happening with investors when the subject of
gold is brought up.
The problem when you have an entire group lovesick over a
particular investment is that the upside becomes more and more
limited. Just take a look at the real estate market in the middle
of last decade. We all know how that party ended.
The old adage "If everyone already owns it, who's left to buy?"
is one of my favorites. Over in tech land, Apple (
) has the mojo going in a big way these days. It's difficult to
find an analyst or investor that isn't bullish on Apple.
Inevitably, however, there will be a retrenchment of some sort. It
happened to all of the best tech investments of the 90′s: AOL,
Cisco, Microsoft, EMC, Dell. Who can forget the thrill of hearing a
new version of Microsoft Windows was coming out and what that meant
to the PC investment cycle? And how about the mania surrounding AOL
3.0, 4.0, 5.0, and so on?
Over time, consumers slowly begin to realize that newer versions
these companies' products aren't worth the price of an upgrade and
decide to pass. It happens! My kids love Apple products, but at
some point they will hear what every kid dreads to hear from their
parents: "What you have already is good enough."
Now Apple is loaded with cash, and they could perhaps get into
different businesses to keep the franchise firing on all cylinders.
Or, it's possible they can continue to innovate new products
, but that's never a sure bet, as many prototype products never
make it pass the design or testing stages.
All in all, Apple is debt-free and has a giant cash hoard last
reported at $65.8 billion), so I would certainly not bet against
them. But I hope I've made my my point about how market leadership
goes, particularly in the tech space. No one stays on top forever,
and building a moat large enough to keep competitors out in the
tech world has proven extremely difficult.
Clearly, long-term investors need to be careful when euphoria
when investing euphoria around a certain commodity or company
reaches a fever pitch.
At Dividend.com, we'll be certain to explore all the investment
angles as we help you along your path to building wealth. Making a
habit of buying income-producing assets like quality
dividend-paying stocks is a great way to achieve great results.
A Look to Next Week and a Weekend Preview
Looking ahead to next week, quarterly earnings will be fairly
light. We will, however, see results from the likes of Accenture (
), Walgreen Co. (
), and a few others of note.
Be sure to catch up with our latest watchlist updates this
, including reports on earnings/story stocks, analyst
upgrades/downgrades, dividend ETFs, and much more. And as always,
you can view our current recommendations on our industry-leading
Best Dividend Stocks List
Thanks for reading, and I'll see this weekend! 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
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