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Market Wrap-Up for Jan.21 (GE, COF, STI, FCX, BTU, MCD, JNJ, more)

Posted: 1/21/2011 4:23:00 PM
Referenced Stocks: BTU;CAT;COF;ETN;FCX

We sometimes hear from dividend investors who simply over-analyze their investments. For instance, dividend stock prices are automatically negatively adjusted on the ex-dividend date to reflect the upcoming payout. This practice, put into place by the exchanges themselves, prevents people from "gaming" the dividend system.

Investors sometimes panic at these price drops, despite them being a natural part of dividend investing. A one- or two-point drop in a high-quality dividend stock, especially as a result of an ex-dividend adjustment, is nothing to be concerned about! Now if the stocks gets down 20-25% off its 52-week high, then and only then you may have something to worry yourself with. This illustrates the danger of focusing on the short term, which usually causes investors to start trying to time the markets. Trying to time every movement perfectly is trading, not investing, so forget about looking for immediate price gains as soon as you purchase a security!

Before we look at today's market action, just a quick note to check out today's new recommendation changes in the link below if you did not read the e-mail alert we sent out earlier.

The market got off to a decent start on the back of solid earnings results from General Electric ( GE ). We also saw positive reactions to financial plays SunTrust Banks ( STI ), Capital One Financial ( COF ), and BB&T Corp ( BBT ). Wall Street analyst upgrades also helped lift shares of Eaton Corp ( ETN ) and Parker-Hannifin ( PH ). Sellers hit commodity plays once again, with Freeport McMoran ( FCX ), Walter Energy ( WLT ), and Peabody Energy ( BTU ) taking a hit. I'm hearing from some gold and silver investors about the recent pain they have seen with the recent price drop. I don't see any particular long-term worries at this point, but with signs of the economy getting its mojo back, the case for the metals may not be as seductive as it has been. Overall, it may be a good time to get some gold stock candidates ready to examine on healthy pullbacks. I have been consistently saying here that the metals could be in for a pullback, and urged caution back in late November, so hopefully anyone that was sitting on nice profits was able to ring the register at higher levels. I still believe that this generation of investors is not afraid of looking at commodities for a part an investment portfolio, so I doubt that we will go back to long-term periods of gold and silver languishing.

We finish up this week's theme of common money excuses people use and my responses to them:

Excuse #16 - "Just put it on the card and we will worry about it when it comes in."
My Response: I understand the convenience factor of carrying plastic over cash. The danger comes when you allow credit cards to take control of your spending vices. If you are a "spur of the moment" buyer, learn to take a pause before making any big purchases you don't actually need.

Excuse #17 - "I must be able to afford this (car, house, etc.)since I was approved for the loan."
My Response: This one is a real trap for those ignorant about the ways credit card companies and lenders operate. What is amazing is that you can see someone get burned once by signing on the dotted line for a deal they couldn't afford, but then they will repeat the mistake not too long after it. Reviewing mistakes in spending and investing is a necessary tool to make one's path to wealth a much smoother one.

You can check out the rest of the money excuse anecdotes in this week's previous e-mails - this is good stuff to remember. Next week, I am going to highlight some of 2010′s trading lesson anecdotes that were highlighted over on my friend Charles Kirk's trading website, The Kirk Report. Lots of awesome stuff coming your way, with my personal perspective to help make you a smarter investor.

As we look ahead to next week, earnings season will be in full bloom with reports coming from the likes of McDonald's ( MCD ), Johnson & Johnson ( JNJ ), Procter & Gamble ( PG ), Caterpillar ( CAT ), and plenty more. Be sure to catch up with our latest watchlist updates this weekend on 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 .

It's a big weekend of football for me with my Jets hoping to get down to Pittsburgh and come out with a victory, sending them to the Super Bowl for only the second time in franchise history. I'm hoping it can happen. Many years of suffering and bad losses make me reserved, but I have been feeling pretty good with this team. I know they talk a little bit too much, but confidence is what you need to succeed at whatever it is you are trying to strive for in life. I try and put that same effort into what we do here everyday at Being an entrepreneur is quite a challenge and you need to develop the makeup to handle the ups and downs of running your own business. There are days when you reach out to several companies to discuss business development opportunities and you hear back from almost everyone, but then there are periods when no one gets back. The way I handle that is I just keep going. To be the best at what you do, you need to have the ability to monitor every aspect of your organization, but also know when to delegate to those around you that can deliver what they have been hired to do. You are only as good as your team in many ways, so you see business and sports is really not too different in the end. Go Jets and Go team!

Thanks again for reading everybody. Have a greet weekend and I'll see you on Monday.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .