The current sentiment from market pundits is that stocks will rally whenever gold prices fall. As I mentioned the other day, this inverse relationship between stock prices and gold prices is no longer a given. In fact, gold prices have been climbing for years in lock-step with the equities markets since the March 2009 lows. I, for one, am not putting much stock into the traditional gold/stocks theory as we assess current market opportunities.
As we get set to wrap up another crazy week in the markets, we remain on our toes to make sure our "Best Dividend Stocks" List is populated only with the best possible current investment ideas. Be sure to check out this morning's post with further recommendation changes if you didn't read the e-mail alert we sent out earlier.
Looking at today's dividend movers, earnings played a factor in helping shares of Nordstrom Inc. ( JWN ) move higher. On the flip side, Dillard's ( DDS ), DeVry ( DV ), and J.C. Penney ( JCP ) saw some selling pressure from their results. Wall Street upgrades were once again out in earnest. Getting a boost from those upgrades were shares of Wynn Resorts ( WYNN ) (China gaming has carried the gains, but will the slowdown in Asia start becoming a factor?), and Wyndham Worldwide ( WYN ) (although the hotel and lodging sector showing signs of breaking down).
Jobs Remain Key
As politicians push the debt ceiling fiasco behind us (until the next time it comes up), I hope the focus shifts to getting the job market back in gear. Late yesterday, the Postal Service announced it will be looking to shed 120,000 jobs by 2015 as it tries to stem its recent losses. That amount of layoffs certainly won't help matters. A stronger job market is essential to getting the real estate market flowing in a normal pattern. What I mean by "normal" is that people can sell their house if need be. Right now, most of the inventory simply isn't moving.
Millions of baby boomers will likely look to sell their homes in coming years as they approach retirement. Unfortunately, many baby boomers have the bulk of their retirement locked up in their homes, figuring it was a safe haven to do so. Falling home prices are devastating to homeowners who have completely paid off their mortgages and have few other income sources to tap for retirement income. Home buyers right now are few and far between, and the flow of younger people into homes has been significantly disrupted. What's more, baby boomers aren't likely to invest more money into their homes through renovations. As you can see, the weak job market is major cloud hanging over our current economy.
The Reality of an Aging Population
The population here in the U.S. is aging and the strain on Social Security and Medicare has become front and center, but we've heard little in terms of solutions on how to tackle the problem. We've been sharing some of the more poignant data points we've uncovered with readers, and below is a partial recap of some of the most important stats.
- There were 36 million "senior" Americans in 2000. There will be 70 million by 2030. (Census Bureau)
- Back in 1950 each retiree's Social Security benefit was paid for by 16 workers. Today, each retiree's Social Security benefit is paid for by approximately 3.3 workers. By 2025 it is projected that there will be approximately two workers for each retiree.
- 35% of Americans over the age of 65 rely almost totally on Social Security alone.
Clearly, finding the right strategy for investing is essential (and we wholeheartedly believe in dividend investing as the solution for readers out there). Investing isn't a sprint, it's a marathon. Veer off course, and your road to success will get longer.
Soda's Gone Flat
Let's look at a recent example with a stock that was in the news yesterday. Sodastream ( SODA ) had been getting tons of coverage on CNBC, including a blindfold taste test with none other than Jim Cramer. We warned investors back in July about getting caught up in these "fad" stocks that they may see on television or read about in newspapers. Anyway, SODA reported earnings results yesterday and proceeded to drop from $68 a share to $46 by the end of the day. I can't stress it enough: leave the fad/hype stocks to traders willing to risk their capital. Instead, get back to the basics of building wealth utilizing compound interest and that is by buying assets that produce income.
Scaling into positions is the best approach for someone that has money they would like to put to work. You see, the job of investing is not a one-day hit-and-run event. It is, as I always tend to say, like taking care of a garden. If you begin to neglect the garden, it won't be long before the weeds sprout up everywhere and the harvest becomes less and less productive. Don't ever get bored. Stay methodical, look for opportunities, and remain on course by putting funds to work in quality dividend-paying stocks. We always aim to have the "recommended" stocks on our list as names we would either initiate a position in or even add to existing positions. More importantly, begin to use more and more of your savings if you can afford to, and start putting it to work for your retirement or other big event in your life.
Big Earnings Out Next Week
Looking ahead to next week, quarterly earnings will continue to trickle in as continue to see how well corporate America did in the second quarter. Watch for earnings results from the likes of Home Depot ( HD ), Wal-Mart Stores ( WMT ), and Hewlett Packard ( HPQ ), just to name a few.
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 much more. And as always, you can view our current recommendations on our industry-leading "Best Dividend Stocks" List .
Thanks for reading my newsletter, everybody! Please pass this on to anyone you think we can get inspired and educated about building wealth and using common sense to do so.
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