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Market Wrap-Up for Aug.6 (BBY, KCG,COH, KFT, TIF, more)
The markets were able to break their recent string of down Mondays, but we did close well off the earlier highs. There wasn't much in the way of earnings out, and/or economic data driving the action. Volume was also a bit on the low side.
As for stock specific stories, we'll get further in detail on the Knight Capital/Best Buy situation below, but we did see Tyson Foods ( TSN ) pull back following their earnings release. Kraft Foods ( KFT ) had been higher as an analyst worked out a "sum-of-the-parts" piece, but the stock gave back much of the session's gains to close flat. Following positive comments from high-end luxury brand Prada, competitors Coach ( COH ), Ralph Lauren ( RL ) and Tiffany & Co. ( TIF ) all racked up gains. Strange action, considering the recent super-cautious outlook from Coach in the past few weeks.
Not the Type of "Investor" You Want to Become
What an interesting Monday we have! There are two big stories in the news today and in both cases, "investors" were affected. The first case is the carryover rescue story that started on Friday regarding Knight Capital Group ( KCG ) and the trading mess that cut shares 60%, or down to $4 and change by this past Friday's close. Over 100 million shares traded on Friday (as opposed to barely a million or two shares that would have normally traded), but those who took long positions into this morning hoping for a bailout, attached to a premium offer, got just the opposite. The shares are down another 25% on the plan the company was set to sign off on. The business media is reporting this as a blow to "investors". Notice how the term investors is loosely thrown around. Instead of identifying them as speculators (which is more of what they are), they group them up with investors. Now if this is what investing is all about, we may all need to look for a new term to describe how dividend investors and those who seek assets that produce income should be called.
That brings us to the next big story of the day - Best Buy ( BBY ) confirming it has received an offer from the company's founder to take the electronics' retail giant private in the $24-$26 price area. Once again, "investors" are being touted, but this time as beneficiaries of such a strong buy-out deal. Here's the thing. Unless you kept bottom-fishing all the way down, this stock is only trading up barely 20% from 10-year lows following this morning's headlines. The all-time highs came in 2006 when the stock was trading near $60 a share. Once again, the business media is out putting a nice polish on what has been a lousy investment situation for shareholders for the last six years.
With the markets retaining quite a bid underneath share prices, "investors" must consider sticking to better quality investments and not be distracted by what is "in play" on a daily basis. The lure is hard to avoid if you are tuned into the daily happenings of Wall Street, but one must find the discipline to maintain the proper perspective needed to build wealth and avoid the pitfalls that come along often in one's investing lifetime. We'll do our best not only to share with our audience the investment ideas we like, but also the ones that can produce severe damage to one's wealth nest egg.
WBK was placed erroneously as a recommended selection this past Thursday and we corrected it by putting it back at the 3.4 rating. We always send out e-mail alerts whenever we do put a stock on the recommended alert list, so please take note for future reference. Although the stock is looking strong, we are not recommending it at this time. Fortunately the stock is trading higher at this time, so it is up to anyone who may have purchased the shares as to how he/she may want to handle the position in his/her portfolio. We can not offer you specific advice as to what action you may or may not want to take with it.
We do apologize for the glitch that took place.
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I hope everyone had a chance to check out our Dividend.com Premium members-only weekend articles , including new features that highlight some of the biggest winners and losers from the week that was, such as analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.
Thanks for reading everybody. I'll see you tomorrow!