There is an old Wall Street adage that says investors should
sell on Rosh Hashanah and buy on Yom Kippur. I haven't quite seen a
study on how successful this strategy would be, but I will pass
along any anecdotes if I run across some data supporting it.
Looking at today's market action, we saw an early pop soon give
way as sellers took over the action by the close. Earnings reports
were plentiful this morning, and the news was good for companies
such as Jabil Circuit (
) and Accenture (
) (both did pull off their intraday highs), while not as good for
Darden Restaurants (
) and McCormick & Co. (
). An early upgrade of industrial/cyclical plays, including Cummins
), Deere (
), and Caterpillar (
) failed to have much of an impact as all three names finished
poorly on the day. Finally, some of the higher beta, low-dividend
yield winners this past quarter saw some profit-taking, including
Mead Johnson Nutrition (
), Carbo Ceramics (
), Estee Lauder (
), and Ralph Lauren (
) and Silver (
) prices could not muster much momentum today after finally seeing
the recent price slide come to a halt yesterday.
The Rosh Hashanah holiday begins today at sundown and ends
tomorrow at sundown, so expect some lighter-than-normal volume in
tomorrow's trading session.
Inflation Will Find You
The average annual cost of a family health insurance policy
climbed 9% in 2011 to $15,073, according to a poll of 2,088 private
companies and state and local governments by the Henry J. Kaiser
Family Foundation and American Hospital Association's Health
Research and Educational Trust. This increase is the biggest since
2005, and costs are projected to reach staggering $32,175 for a
family by 2021.
This trend certainly puts more pressure on corporations and
small businesses trying to factor in fixed costs as they look
forward with their projections. Rising costs hamper companies'
ability to grow (hire new workers) and raise compensation (wage
Employees are paying 28% of healthcare premiums on average for
family plans this year, similar to last year. The proportion of
health insurance premiums paid by workers has risen 131% since
2001, however. Sixty percent of employers said they offered medical
benefits this year, a decrease from 69 percent in 2010.
Companies are offsetting escalating healthcare costs by offering
higher deductible premiums. This year, 17 percent of covered
workers were enrolled in such plans, compared with 13 percent last
year and just 8 percent in 2009.
How Investors Are Fighting Fixed Cost Inflation
I have talked about several strategies investors can use to help
offset inflation. As always, your biggest ally is buying assets
that produce income. The Financial Times just highlighted the fact
this past weekend that U.S. investors have put $2.5 billion in
Exchange Traded Funds that track dividend-paying stocks since
Your wealth will only deteriorate if you don't acquire
income-producing assets. Taxes and inflation (despite what the
government says, prices ARE higher for many everyday items) will
chew up accounts of those who let their money rot. And as I've said
before, The Federal Reserve is clearly not on the side of the saver
these days. The Fed has pledged to keep rates at all-time lows for
the foreseeable future. Now there's nothing wrong with raising cash
if you want to, but sitting on that money for long periods of time
will never provide you with good best investment returns.
In investing, compound interest is a must-have tool if you allow
your investment income to grow. That's why I stress to our readers
that the trend of rising dividend payouts and profits will keep
many portfolios ahead of any potential inflation threats.
Taking too little risk is a big problem for seniors as well.
There aren't many investment vehicles out there that will allow you
to outpace taxes and inflation. Interest rates are historically
low, so money markets and checking accounts really have nothing to
offer. That's why we love dividend stocks so much!
Even if health care costs aren't factor in your specific
situation, a forecast out from the Department of Agriculture
yesterday said food price inflation will likely persist in 2012,
with prices expected to increase 2.5% to 3.5%.
Keeping up with inflation is critical, and the income generated
from quality dividend-paying stocks should be a key part of
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. Thanks again!
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