As silly as it seemed that the markets would pop big on better-than-expected housing starts data this morning, that is exactly what happened as we held the early spike all the way through till the day's end, but on a bit lighter volume than one have expected.
As market watchers rejoiced (we'll take silly rallies as well) about great housing data being today's catalyst, I want investors to think about the rally for a second. So we are going to add inventory (based on today's housing starts number) to an already bloated real estate inventory (short sales, foreclosures, record backlog of unsold homes, etc.), and that is reason to celebrate? As always, we'll accept a rally any day of the week, but let's get a grip on reality here.
It was no surprise to see Home Depot ( HD ) and Lowe's ( LOW ) move up on the housing data, but we'd like to see those dividend yields a bit higher before we get excited about those home improvement plays. Days of big pullbacks would be an interesting time to give those two names a deeper look.
Looking at the financials, I would have expected an even better bounce considering the big pop in the averages today. I'm noticing the trend of what technical analysts would call "lower highs" in the beleaguered finance sector. Be very careful around stocks making lower and lower highs - many times, investors are fooled into thinking a stock is performing well, when in reality, it isn't. Gold ( GLD ) prices have been making these sort of "lower highs" for the last few months, and you can see how that's has been working out. The yellow metal is sitting around 25% off its yearly highs at this point.
So, what's working well today? Wall Street analyst upgrades, of course. Stocks like Ross Stores ( ROST ), TJX Companies ( TJX ), and Mid-American Apartment Communities ( MAA ) were some of the big gainers. A couple of earnings-related plays did not participate in the rally as shares of General Mills ( GIS ) and cruise-line operator Carnival Corp ( CCL ), both failed to see any upside action following their earnings commentary and outlook.
Puff-Piece Journalism Aplenty
If I read another "25 Companies/Startups/People/CEOs/Trends to Watch in 2012″ article, I might lose my mind. It's bad enough we have to read puff pieces each day with barely any fact-checking, and are approved by editors whose main interest is generating page views (to lure in more advertising dollars). It's pretty pathetic when you stop and think about it.
Realistically, only a few analysts or companies can reach the highest levels of legitimate success in the world of money - regardless of what today's "social media" coverage will have you believe. All too often, you'll hear about a new startup that is going to "shake up" a particular industry, only to fade into the sunset six months later. Sometimes, these startups will mask their failures by claiming to be "acquired" by another organization. The terms of those deals are almost always undisclosed (meaning the early investors simply stepped in and took back whatever of their money was left). Another one of my favorite terms is a "talent acquisition." In those cases, you can be be certain that investors in the company were really hosed.
As investors, we shouldn't look at everything with a cynical eye, however. Just be selective about the sources of information you utilize. Every once in a while, take a step back and ask yourself if what you're reading or hearing actually makes sense.
Here's another quick tip: always be wary of claims about the "the next big thing," and of pundits that change their opinions by the day. These are nothing but ratings-grabbers and advertiser shills for the most part (not to mention the venture capitalists who are in the ears of many of the reporters). Just look at the poor performance of many of these media darlings once they IPO! I'm not saying this is the first time we have seen the media pull off the charades described above, but the manic speed at which things develop today is highly concerning.
We at Dividend.com do very little in the way of advertising on outside sites. When we reach out to various organizations from time to time, I can tell you that the type of exposure offered is directly correlated to the amount of money you can spend. You want to be a guest on a TV show? Be prepared to fork over some decent advertising dough. Does that mean you can go on the air promoting any old crap? Not really, but there is plenty of infomercial time you can buy if that's your lane. We hold our standards very high here at Dividend.com, and I hope everyone that reads our work will do the same.
For those of you that are working on making a difference in your field, avoid trying to "game the system." Instead, seek to build something of real value to others. It's much easier to monetize a truly valuable product or service.
Boring is a Good Thing
I try to instill this message in my kids (especially my teenage girls) who sometimes think certain things are not as fun as they used to be. Sorry kids, but that comes with the territory of becoming an adult.
"Boring" can be good in many cases. After all, who wants to live like the often-admired reality stars on television with cameras rolling in their "exciting" lives that we all can see will inevitably end badly? There is nothing wrong with a routine (as boring as it could appear) that paves the way to success. Most of the people I know from my past who loved the action and excitement didn't exactly hit some of their much-publicized goals, and unfortunately some now spend much of their time trying to make up for poor business and personal missteps. We all make mistakes, but the minute you think success needs to be all glitz and glamour, you will have lost your way. Most stars (athletes, celebrities, entrepreneurs) today will tell you they lead pretty boring lives. When the cameras are rolling, however, producers can easily create the image of non-stop excitement.
The next time someone accuses you of being boring, it may be a good reason to put a big smile on your face!
Income, Income, Income
At Dividend.com, we maintain our focus on the best income-producing investments the markets have to offer during time of heightened volatility. We want to make sure we have only the most pullback-resistant names on our Best Dividend Stocks List . Also, if we see the market putting in what looks like a decent bottom, we will be prepared to scale up the list of stocks we like. Stay tuned and be sure to look for Dividend.com Premium member alerts along the way. Don't count on the government or your employer to set you up for a remarkable retirement. Take control, do your own research, and achieve your goals yourself!
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