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Market Wrap-Up for Jan.14 (JPM, PNC, STT, GS, NEM, MEE, GE, more)
1/14/2011 4:13:00 PM
As I progress through my early 40′s, I like to think back to how I approached money in my earlier years.
Being an entrepreneur, there is always a constant need to invest in your business and in yourself. That said, I still regret not being more proactive when it came to thinking about long-term wealth and financial security.
The beauty of compound interest (which dividend stocks are great at providing when you re-invest those dividends) is something to marvel at when you start tabulating the numbers. You can use our Compounding Interest Calculator to measure your hypothetical rate of return, based on the number of years and amount of money you invest.
Of course, getting married, having kids, and buying a home can put quite a dent in your best-laid plans. What was Mike Tyson's famous line? I believe it was "Everyone has a plan until they get punched in the face." Now I'm not trying to liken a boxing match to your family life, but the fact remains that the expenses you incur in adulthood can take quite a toll on your financial goals. Some investors are now in a position of making up for lost time, scrambling to start or build their retirement nest egg at a later stage in their lives than they'd prefer.
The way I see it, the solution to this problem is simple: put more money each month to work for you. Some things you learn with age, and when it comes to money, most of us don't start to really appreciate the power it has in our lives until we look up at the scoreboard and realize we've lost some initial ground. The key word I used there is "initial", because it is NEVER too late to come back and make a difference. My dad had a barber friend who bought his first house at 77 years old! That's the way you have to look at life. Never stop trying to achieve your goals, no matter how late you are in the game. I don't care if all you can afford is $25 a month to start investing. Pick an online broker and get an account open if you don't have one already. If you're employed, set up an IRA and fund it with the maximum contribution you can make every year. And if you have kids, get a Coverdell Education Savings Account started for each of them and fund those as well. If your employer matches your 401k contributions, then do that too! Do whatever you can to make it happen. In time, you'll look back proudly at the sacrifices you've made.
Now here comes a warning for investors out there: don't get involved with penny stocks! Too often, people get enamored with the thought of lottery-like winnings. Some of the smartest people I know have fallen victim to the penny stock game, as the lure of quick and easy profits is too much for many to resist. Instead of risking your hard-earned money on speculative trades, put your funds to work for you in quality dividend investments that can provide compounding returns for many years. Even just $1K invested in dividend stocks can turn into $8K in 20 years (assuming the historic 11% annual return for quality dividend-paying stocks). That's an 8-fold return on a single initial $1K investment, without any additional funds committed!
Getting into today's market action, we saw JP Morgan ( JPM ) trade higher following the company's earnings results. The early pop set a positive tone for other names in the financial space, including PNC Financial ( PNC ), State Street ( STT ), and Goldman Sachs ( GS ). A decent portion of the commodity space lagged today, with coal names getting the brunt of the selling. A downgrade to shares of Walter Energy ( WLT ) hurt other names in the sector, such as Consol Energy ( CNX ) and Massey Energy ( MEE ). Gold miners continue to struggle in 2011 as we saw another down day for Newmont Mining ( NEM ) and Barrick Gold ( ABX ).
We are headed into a long holiday weekend (Martin Luther King Jr. Day), with the markets closed on Monday. Once we get back into the fold, there will be scores of earnings reports beginning to head our way next week. Look for quarterly results from IBM Corp ( IBM ), General Electric ( GE ), Goldman Sachs ( GS ), Wells Fargo ( WFC ) and more to pace the action next week.
Be sure to catch up with our latest watchlist updates this weekend on Dividend.com Premium, including reports on earnings/story stocks, analyst upgrades/downgrades, dividend ETFs, and more. And as always, you can view our current recommendations on our industry-leading Best Dividend Stocks List .
Have a great weekend everybody and I'll see you on Monday! Go Jets!