In a market that should be focused on fundamentals, we once
again get accommodation rumors from central bankers that stop any
sort of needed market reality check (pullback) from taking
This morning we saw fundamental worries from FedEx (
the company significantly cutting guidance
, and yet, the markets are fixated on the potential for further
easing strategies. Goldman Sachs (
) actually came out with a note saying they expected a FedEx
estimates reduction. Yet the brokerage didn't feel the need to make
the call beforehand!
We certainly don't want to bring on the dark clouds, but what
moves the markets over the course of time is always fundamentals.
Commodity stocks have been indicating major worries about the
global economy, yet Wall Street analysts are just doing what they
do best, upgrading and re-affirming positive ratings on the stocks
we all know and follow. All the while, these so-called experts
aren't realizing earnings power is the biggest ingredient we need
to grow the market to a sustained level. Again, despite the
caution, we do believe
some solid names
are worth committing capital to, and we will continue to stay
focused on the best places for investors to put their money in a
very confusing market environment.
In related news, United Parcel Service (
) shares were down in unison with the FedEx earnings warning. Other
transport plays lagging included Union Pacific (
) and Norfolk Southern (
). Elsewhere, we did have a couple of Wall Street analyst upgrades
helping lift shares of Time Warner (
) and Eli Lilly (
The Party's Over
A certain neighbor of mine is known for having the biggest
annual Labor Day parties in town. The current owners acquired the
house about five years ago, and from what I know about them, they
were heavily involved in real estate. They apparently enjoyed quite
a bit of success in the years leading up to the purchase.
Fast forward to this past Labor Day, and the home's exterior
landscaping is looking quite shabby. The Labor Day parties that
used to jam up an entire street had just three cars in the driveway
during this year's holiday. Oh, and the home is now back on the
market - as a short sale.
It's amazing to see how people can swing from the highest of
highs to the lowest of lows in their financial or personal lives.
In many cases, folks let early success get to their heads. They get
lost in the moment and forget how easily newfound money can melt
away if you don't respect it. The scary past is how ill-prepared
many people are for such a downturn, despite being involved in an
industry (like real estate) where the red flags should have been
everywhere they turned. Most real estate professionals I have
spoken with describe the beginning of the end for the real estate
boom as having coincided with scraping the bottom of the barrel for
the least qualified buyers (mortgage brokers actually got to the
point of approving mortgage applications based on just a phone bill
No one ever wants to hear about people struggling, but these are
real-life examples that shouldn't be ignored. We need to always be
aware that the party could end sooner than most believe. If you
practice a free-spending lifestyle, the chances your children will
follow your lead are certainly quite strong. On the other hand, if
you respect the money you accumulate, your example will certainly
make your children hesitate a bit when it comes to going hog wild
the first time they get a bit of spending freedom. My daughter
smartly saved quite a bit of her earnings from her summer job, at
the same time, realized how hard one needs to work to get started
in the world we live in. That's a good start, but I'll be there
along the way to make sure she stays consistent with her processes.
I owe her that much, and we all owe the next generations as many
good lessons as possible. Sharing the stories of things going wrong
also hits home with my kids as they get older. We all want to see
things end well, but not everybody will have the discipline to see
it that way.
An Important Note Regarding the Best Dividend Stocks List
We want to make sure everyone understands that the stocks on our
Best Dividend Stocks List
are the names we currently like for new investor capital,
regardless of what date the stock was first recommended on. If and
when a stock is removed from the list, we will clearly state
whether the stock should be sold (which is rare but occasionally
will happen), or simply held in one's account until we see a better
entry point or catalyst.
And here's one last thing to remember about what we do here at
Dividend.com: it's not just the names that we recommend that can
help you build wealth, but also the things we try to steer you away
from that are just as important. Forget about speculative or penny
stocks, chasing unprofitable IPOs, and listening to the manic
talking heads in the business media!
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Thanks for reading everybody. 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