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Market Wrap-Up for Aug.11 (CSCO, NWS, AOL, BAC, BLK, GLD, more)
Everyone knows I've been a bit frustrated with business media coverage, and this morning CNBC put the one and only Donald Trump on for more than just political talk. Trump came on to talk about stocks he he's been buying (which included the much-maligned Bank of America ( BAC )). I figured he would have at least mentioned REITs (as he has said in the past, he only puts his money in what he knows, which is real estate), but that wasn't the case. We all know Donald Trump means ratings, and that is what business television is all about these days.
We heard lots of chatter today that Europe may come together and ban short-selling (traders betting against the market) to stem the recent declines. This is eerily similar to what happened in the U.S. markets prior to the collapse of several financial institutions, as many market observers cried out for investigations into short-selling. In my opinion, all this talk is once again ignoring the true problem at hand: banks using too much leverage and begging for help when their bets go bad. My guess is bailout talk could be next. How will this scenario affect U.S. financial institutions? Well, that remains to be seen.
Before we dig into today's dividend movers, I noticed AOL ( AOL ) shares bounced up 12% today to close at $11.47. The stock had recently plummeted down from $16 following its subpar earnings results. So, what is moving shares back up today? The company announced it intends to buy back $250 million worth of its own stock. This process will reduce the float (number of shares outstanding), but once again, a company is ignoring the true problem at hand. AOL needs to figure out how to grow their revenues and profits of its business instead, either through acquisitions or developing innovative web properties in-house. You can mask weakness easily on Wall Street, but at the end of the day, results are what keep the lights on!
Getting back to the dividend scene today, the markets have taken back part of yesterday's heavy losses. Despite these gains, we are still working through our "Best Dividend Stocks" List and we did remove two names from our list this morning, so be sure to read this post detailing the latest downgrades if you didn't notice the e-mail alert we sent out earlier this morning.
Today's trading was a great time for aggressive investors to get out of high-beta (usually low-yield) plays they may have been getting buried in. As a former trader, it was days like today that I would look to take advantage of higher prices and cut my losses whenever I had positions misplayed.
Earnings results pushed up shares of Cisco Systems ( CSCO ) (still hard to see where new business will come from to bring this former tech titan back), News Corp ( NWS ) (despite the recent troubles the company surprised with results, also raised its dividend but it is still too small to be taken seriously), and Advance Auto Parts ( AAP ) (automakers may want to get out of the manufacturing business and just sell parts!). Wall Street upgrades were also running rampant once again, lifting up shares of Simon Property Group ( SPG ) (REIT yields remain on the low side, and we would love to see a 4-handle in front of the yields), Anadarko Petroleum ( APC ) (with oil prices approaching bear market territory it will be interesting to see if the natural gas stocks can get their mojo back - I'm not so sure about this one), Blackrock ( BLK ) (yield is looking better, but technically asset managers have been breaking down). Another huge batch of Wall Street upgrades comes despite the economic turbulence we are feeling. A negative to possibly take away from today's rally was the fall-off in volume from yesterday's sell-off. We would prefer the opposite effect to be the case, where volume picks up on the big up days and pulls back on lesser volume. As I've been saying, now is not the time to be super-aggressive, although analysts would have you believe differently.
Lastly, gold prices ( GLD ) saw a bit of a pullback as margin requirements got a bit more expensive for traders buying gold futures. Some are saying this could put the brakes on the recent meteoric gold rise, as it was when margin requirements were raised for silver futures.
Just a reminder for all Dividend.com Premium subscribers: with all the recent dividend recommendation changes, unless we specifically issue a "Sell" call on any of the individual names we remove (very rare), it is simply a call to not add any new capital into those particular stocks. The market is clearly undergoing some major turbulence and we want to make sure the names that remain on our list are the best-positioned in a volatile market. That said, some of the names we have removed could find themselves back on the recommended list if we see better entry points or if the worst of the downside is behind us. On that note, be sure to check out our ever-popular weekly "Top 50 Watchlist Names" post that is out today (some recently-downgraded names appear on this list), only for Dividend.com Premium members. Our service isn't about trading, but when the volatility rises, we tend to be more active in our ratings changes. Unlike most of the exuberance and almost always "bullish" Wall Street calls you may be accustomed to, we don't like to take chances with shares that have considerable downside risk. This strategy worked extremely well for us back in 2008/2009 during the financial crisis and subsequent market meltdown, so rest assured, we'll keep you on top of things!
And here's one final note that I like to stress to investors: if you lack consistency when it comes to putting money to work, or are still contemplating your first move, it's time to get busy (regardless of what the market is doing day-to-day, month-to-month, or year-to year). The hardest job isn't finding the right stocks to buy (Dividend.com has that covered), but rather it's the individual's ability to allocate funds and put them to work. Be relentless! No one will ever care more about your money than YOU!
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.