There was some wild trading going in in the momentum stocks
today as the Nasdaq index continues to see extreme volatility. The
market closes out the month tomorrow and plenty of under-performing
stocks were shown the door.
Some of the capital leaving the growth-related names looks like
it's being put to use in some of the dividend-centric names we
follow closely. That move is both good and bad. The good news is
that share prices are once again moving higher, but the bad thing
is that many of the stocks we like had been hanging tough anyhow.
As prices move higher, yields drop, making them a bit less
attractive. We are carefully watching this trend as it unfolds and
will alert subscribers to any changes we decide to make to our
Best Dividend Stocks List
Getting back to the high-beta, low-dividend yield names being
sold, we saw Wynn Resorts (
), Carbo Ceramics (
), and Ralph Lauren (
) once again pacing the way lower. Shares of once-hot fertilizer
play Mosaic (
) hit a new 52-week low today following the company's latest
earnings results. Meanwhile, insurers bucked the selling, with
stocks like Metlife (
), Lincoln National (
), and Prudential (
) pushing higher. Part of the excitement in that sector could be
traced to a deal announced earlier today where Harleysville Group (
) is being acquired by Nationwide Mutual Insurance Co. for nearly a
90% premium ($60 a share). Talk about paying a big price. I'm
scratching my head why Nationwide would ever want to pay this much
of a premium when Harleysville's previous all-time high was around
$40 a share. Congrats to HGIC shareholders nonetheless.
Doing "Just Enough" is Never Enough
Many readers know I am a big sports fan, and sometimes I like to
point out in-game events that have correlations with people's real
lives. Yesterday, the Mets created a big controversy in the sports
world when shortstop Jose Reyes was pulled from the final game of
the season in the very first inning.
You see, Reyes was trying to win the National League batting
title, given to the player with the highest batting average in the
league. He entered his final game yesterday with every intention to
seal the title, no matter what.
Reyes led off the bottom of the first inning (at his home
stadium in New York) with a bunt base hit. As had been planned
before the game with his manager, Reyes was then removed from the
game, with another baserunner taking his place. This strategy was
to designed to all but guarantee Reyes the batting title, since
that first inning hit put him a few points above the next closest
contender (if he'd stayed in the game, he risked making outs and
lowering his batting average). The move meant that Milwaukee's Ryan
Braun would need to have no less than three hits in four at bats in
his game that night in order to overtake Reyes for the batting
crown - not an impossible feat, but unlikely.
The strategy quickly backfired, however, as the home fans in New
York went berserk at the move. Streams of boos rained down upon
Reyes and the Mets. Clearly the fans felt he was taking the easy
Rather than give his best effort in a full game, Reyes decided
his best chance to win the batting crown was to play it safe. To
him, the risk of making outs outweighed his chances of getting more
hits (which could have raised his average to an unreachable level
for his competitor).
In the end, Reyes did win the batting title. The player chasing
him (the Brewers' Ryan Braun) went 0-for-4 last night. Not to take
anything away from him winning the award, but the way Reyes
accomplished his feat has many sports fans across the country
criticizing his minimal effort.
It just so happens that yesterday was the 70th anniversary of
legendary ballplayer Ted Williams' famous feat of batting .406 in
1941. Hitting .400 in baseball is about as rare a feat as possible.
How "Teddy Baseball" achieved his historic average that year
couldn't have been more different than the way Reyes went about his
business last night.
Heading into the final day of the baseball season, Williams' Red
Sox had a doubleheader scheduled. His average stood at .3995, which
is rounded up to .400 when the statisticians make their final
adjustments. Williams' manager and teammates advised him there was
nothing wrong with sitting out his team's final two games to
preserve his .400 average. How did the future Hall of Famer respond
to this advice? He simply said, "If I'm going to be a .400 hitter,
then I'm going to be a .400 hitter all the way."
Williams played both games of the doubleheader, collecting six
hits in eight at-bats and finishing the season with a .406 batting
average. He'd later miss nearly full seasons of his baseball career
serving in World War II and later the Korean War as a talented
fighter pilot. Talk about sacrifice!
I bring up this sports analogy to help remind us that the road
to wealth is paved with hard work, not with shortcuts. Doing the
bare minimum simply isn't enough.
Just this week, a new poll by NPR, the Robert Wood Johnson
Foundation, and the Harvard School of Public Health, showed that
many retirees found retirement was much harder than they'd
anticipated. The survey results suggest the main problems people
encounter are money and health. And a third of retirees said their
finances were worse than before retirement, with an even greater
percentage reporting deteriorating health. The same poll asked
pre-retirees about their current situation and found that many
greatly underestimate the chances of running into money and health
Doing the bare minimum (for example, saving a set amount each
month to invest, but never pushing harder to raise the amount you
invest over time) will likely leave many short of an enjoyable
period later in life. Some may think that their current financial
obligations will eventually wind down, and then they'll really
begin to stockpile away money for their golden years. Unfortunately
that is almost never the case. Too many unforeseen events can
happen (divorce, a family death, getting laid off, etc.), and you
can't afford to lollygag when you could be doing more - all the
while still enjoying life's finer moments as well.
As I mentioned above, building wealth requires you to aside
funds and invest them in income-producing assets (dividend-paying
stocks is our immediate focus, but it can be investing into growing
your business even more, or buying a property that can be cash-flow
positive). If you are already retired, it may mean coming back in
the work force part-time (if you are unable to work because of a
disability, there can be work you do from home possibly) or not
being gun-shy when it comes to staying active as an investor. Maybe
you decide to re-invest some of those dividend checks back into
quality companies as well.
You do not want to turn super-conservative if you can help it.
What do the best coaches always tell their players? You play hard
until the final whistle blows. Do the same thing in your own
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
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