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Market Wrap-Up for Dec.22 (ORCL, GE, MJN, GLD, POT, CME, more)

Posted
12/22/2011 4:06:00 PM
By: Dividend.com
Referenced Stocks:CME;DD;GLD;MJN;ORCL

The global markets continue to act strangely, with the averages in Asia seeing mostly down days while the European indices rally on any anecdotes of impending bailouts. The U.S. markets have been performing increasingly on the upside as well, despite the questionable fundamentals developing on the earnings side with companies like Oracle ( ORCL ), DuPont ( DD ), Texas Instruments ( TXN ), and several other well-known plays that have recently warned about decreasing profits.

There weren't too many stock-specific headline stories making waves today, so Wall Street analyst calls carried a bit more weight in the session. With that said, analyst upgrades did well in today's market rise, led by moves higher from Potash Corp ( POT ) and CME Group ( CME ) (read about their upgrades here and here ). We did have a well-known stock making headlines this afternoon, but not in a good way as baby formula maker Mead Johnson Nutrition ( MJN ) was hit hard (closing down nearly $8) on news of a possible baby formula-related infant death. Gold ( GLD ) prices were once again having trouble gaining traction, while bearish technical formations continue to hang over the metal price - and gold-mining plays as well.

GE Changes Pension Policy - Many More Will Follow

A recent NationalJournal.com article highlighted the major shift taking place in corporate America regarding declining pension benefits. During its last negotiation with unions, General Electric ( GE ) held firm its plan to eliminate pension plans for new union hirees starting in 2012. Instead, the company will offer a lump sum equal to 3 percent of new hirees' salaries to be put annually into a 401(k), and will match up to 4 percent of workers' contributions.

This development puts more of the emphasis on retirement planning in the hands of the individual. Increasingly, people will be on their own to determine the best investment ideas to sink their nest egg into. Although the impending shift may not sound like that big a deal, the lack of pension obligations will be a big relief for corporate America. I can't stress this point enough: you need to fully understand and take charge of your retirement savings. I will continue to pound this message home in this daily newsletter (as I have already).

U.S. Population Growth Slowest Since 1940 - Are We Mirroring Japan?

A few months back, I mentioned several signals that the U.S. could be replicating the deflationary cycle that our friends in Japan have been dealing with for the past couple of decades. The big factors in this trend include an aging population (10,000 people a day turn 65 in the U.S., which is expected to continue for nearly two decades) and falling birth rates.

According to the U.S. Census Bureau, the U.S. population increased by an estimated 2.8 million to 311.6 million from April 1, 2010 to July 1, 2011. That growth rate of 0.92 percent was the lowest since the mid-1940s. Just a few days back, the Pew Research Center reported a record low 51 percent of U.S. adults are married, compared to 72 percent in 1960. The average age at which men and women get married is also higher than ever. These trends will have enormous investment implications in the coming years. You can bet we're paying close attention to these factors and will continue to keep our subscribers well-positioned to ride the demographic shifts.

Time to be More Selective in the Dividend Space?

Fund managers crowd more and more into the best-performing dividend stocks with the year coming to an end. Since these moves are coming with little regard to valuation, we need to step back and be sure we aren't keeping any overextended names on our Best Dividend Stocks List .

That doesn't mean any of these high-quality stocks need to be sold, of course. I'm just pointing out a potential scenario that could develop as the new year begins. Some of the biggest winners of 2011 could see some selling early in 2012, which would allow for some better entry points. Again, that's if this sort of scenario plays out. Historically, paying 17-18 times earnings for a utility stock hasn't proven to be a great investment from a valuation standpoint.

Unlike Wall Street, which is screaming for investors to "buy buy buy" all day long, we at Dividend.com are never afraid to advise a bit more caution with your hard-earned capital. As always, we will keep Dividend.com Premium subscribers alerted to any further changes we many need to make to our recommendations.

New Watchlist Article Out Today

Be sure to check out our weekly Top 50 High-Yield Watchlist Names post that is out today, exclusively for Dividend.com Premium members. This list gives readers a good idea of what stocks we're watching behind the scenes here for potential upgrades.

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Thanks for reading, and I'll see you tomorrow!

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