Markets

Market Wrap-Up for Aug.22 (NEM, GG, GS, BAC, JPM, WFC, more)

The markets were off to the races early on, but the averages began pulling off the early highs as investors settled in and absorbed data points like the reported rise in mortgage delinquencies to 8.44%, up from 8.32% in the first quarter.

An early Wall Street analyst upgrade poured gasoline on the red-hot gold-mining sector, boosting up stocks like Newmont Mining ( NEM ), Barrick Gold ( ABX ), and Goldcorp ( GG ). The financial sector (brokers, banks) took the life out of the rally with names like J.P. Morgan ( JPM ), Goldman Sachs ( GS ), and Wells Fargo ( WFC ) seeing red. Earnings are not setting up to be much of a factor this week, so we'll be looking at other anecdotes which could move the needle for the averages.

It was no rest for the weary this weekend as we continued to parse through the continuous newsflow and how it may affect investors in the short term and the long term. News in Libya of rebels perhaps taking over the regime there is being viewed as a positive in the short term, eventually bringing some relief to oil prices. Oil prices actually gained nearly $2 a barrel today, so for one day the outlook for lower prices doesn't take hold. The bigger effect on oil prices, of course, will be if the economy is ready to stabilize. If oil does decline, consumers will likely see a bit of relief at the gas pump. Driving to and from the office, I see gas prices dropping a penny or two a day over the last week. Isn't it funny how gas prices tend to go up so much faster than they fall?

We're also seeing market optimism stemming from Federal Reserve chairman Ben Bernanke's annual Jackson Hole speech, which is slated for this coming Friday. The hope for some market watchers is that the term "stimulus" is used often during Bernanke's speech. Manic as the market is, we will certainly have pundits use any hint of QE3 (quantitative easing) as a bad thing for the markets. Clearly, it has paid off to be long gold throughout the accomodative nature of the Fed.

As we continue to navigate through short-term volatility in the markets, one of the things I go back to is the idea of staying vigilant in putting money only in the best names at all times. As we have been cutting back the number of names on our Best Dividend Stocks List , we know that investors still need ideas to put their capital in. It's certainly not easy to get investors to think long-term when you have traders and pundits on television pushing the retail investor in six different directions with their inconsistent messages of buying and selling. The business media loves these kinds of match-ups, which in my opinion on serve to make investors' jobs more difficult. When confusion rears its ugly head, retail investors sometimes freeze and can become very frustrated.

On Wall Street, hedge fund managers are heroes one minute and losers the next. Look at the success of John Paulson, who bet big against real estate at the top of the bubble, but is now seeing poor results from ill-timed "value" bets on the likes of Hewlett-Packard ( HPQ ), Bank of America ( BAC ), and Citigroup ( C ). One thing I've learned from watching years of stock market predictions in the business media is that pundits will spin their bad calls, just as politicians spin their constituents that all the bad things happened during the prior administrations. Selective memory will always run rampant. If accountability was a factor, there would be too few guests to book a one-hour slot, let alone a full day of business/political talk!

I always tell investors to avoid going "all in." Instead, allocate your capital consistently on a monthly basis to the best income-producing stocks. That way, you'll get compound interest working for you sooner rather than later. In contrast, I want you to think of day trading like gambling in a casino. Sure, some gamblers have an edge - but only if they absolutely dedicate themselves to honing their strategy. Most people simply aren't geared toward gambling or trading success, however. The bet casinos make is on human nature and the inability for most to sell when you are supposed to and "ring the register" when things get over the top frothy.

As a former trader, I can tell you that the fulfillment from trading isn't all it's cracked up to be. Personally, my feeling of accomplishment actually faded with every year I dedicated to beating the markets on a daily basis. If you are trying to battle the markets each and every day, I wish you all the best luck in the world, but understand the energy you put into trading can be better put to work by investing in yourself as an entrepreneur. Then you can still reap the rewards of the markets, but through long-term dividend investing and the power of compound interest.

I know there are retired investors out there who will use a small portion of their capital for trading, and that's fine - as long as you limit the potential damage from a bad run. Opportunities to get that money back are especially hard to find in this day and age. If you want to raise cash, by all means get out of some underperforming names that are showing effects of negative industry shifts. Moving to the sidelines is not the end of the world, but too often many are not courageous enough to get back in when the rallies begin to have real meaning. Many investors missed out on some phenomenal gains as well as dividend increases from the spring of 2009 all the way up to the recent downdraft. Quality names will always find their place in the best-performing list, in good markets and in bad.

I hope everyone had a chance to check out our Dividend.com Premium members-only weekend articles, including the new features that highlight some of the biggest winners and losers from the week that was, including analyst upgrades/downgrades and earnings/story stocks. These articles are a great way to catch up on the week that was in the markets. We also have a rundown of how various Dividend ETFs performed on the week.

Thanks for reading everybody. 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 .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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