Back to Main

Market Wrap-Up for Jan.20 (FCX, PH, UNP, PNC, FFIV, more)

Posted: 1/20/2011 4:21:00 PM
Referenced Stocks: FCX;FFIV;PH;PNC;UNP

Make no mistake about it: market pullbacks like the ones we've seen in the past couple days are a healthy part of building a long-term foundation for investors. Getting rid of shaky hands will eventually strengthen a stock's shareholder base and will lead to shallower pullbacks in times of overall market volatility.

Speaking of shaky hands, did anyone catch the action in momentum stock F5 Networks ( FFIV )? The stock is currently down $35 (-23%) as we approach midday. This move illustrates is the danger of chasing high-beta momentum plays. The beauty of investing in solid dividend stocks is that unless there is some sort of accounting blow-up, you almost never see a market response like we are seeing today in FFIV. That's not to say that all dividend stocks are safe though - that's why we have our "Best Dividend Stocks" List!

As for the rest of the market, we are seeing a second day of sellers booking some recent gains. There are few names that are standing out on the upside, but the downside is full of negative earnings reactions. Some of the major stocks that stood out on the downside today included PNC Financial ( PNC ), Freeport McMoran ( FCX ), Union Pacific ( UNP ), and Parker-Hannifin ( PH ).

Gold and Silver prices tumbled as both metals broke key technical levels. If you have been waiting on the sidelines to gain exposure to the metals' sector, you will have some good opportunities to initiate positions in the coming weeks. One last thing to consider today as you see some of your favorite names perhaps have a down day as part of an earnings reaction, is that you should avoid trying to be a "portfolio hero" and try and jump in on the first day of a stock's fall. Wait for the selling and noise to subside in whatever the stock you own that may be going down, and you will likely have better moments to build on any positions.

Continuing with this week's theme, here are some more common money excuses people use and my responses to them:

Excuse #11 - "It's cheaper to eat out than eat at home."
My Response: The better answer may be that is is much more fun to eat out, but certainly not cheaper in most cases. There's nothing wrong with learning to work your way around a kitchen or even reach for a box of cereal or TV dinner once in a while if time constraints kick in.

Excuse #12 - "I'll save next year when I'm making more money."
My Response: There is no better time to start saving/investing than when you actually have a job. For many, this excuse can be the most deadliest when it comes to building wealth. Everyone knows the older you get, the more expenses you incur (getting married, having kids, vacations, cars, etc.).

Excuse #13 - "You have to leverage debt to become rich!"
My Response: This is a dangerous play for many that try and speed up the road to wealth. We have all heard the amazing stories of real estate tycoons that pulled off incredible wins, only to get caught off-guard when markets turned. The financial road is littered with failed money gambles that were based on leverage. The banks have always been guilty of encouraging investors to roll the dice a bit too much when times were good. We have seen the fallout from that the last couple of years.

Excuse #14 - "I need to invest in a car."
My Response: The words "invest" and "car" almost never belong in the same sentence unless you are extremely knowledgeable about the collectible car market.

Excuse #15 - "If everybody got out of debt, the economy would collapse!"
My Response: Worrying about the economy's collapse should never be the consumer's concern. Living debt-free should be an ultimate goal of yours, but giving yourself a license to spend recklessly is just plain dumb.

You can check out Tuesday and Wednesday's daily newsletter for my responses to the first ten money excuses.

Be sure to check out our latest Top 100 Dividend Stocks on Our Watchlist post we published earlier today. Also, don't forget to check out our out new Investing Videos section that contain numerous topics of interest to dividend investors. And as always, check out our industry-leading Best Dividend Stocks List for the top dividend names to put money into right now.

Thanks for reading, and 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 .