The markets came out of the gates in the red today, as commodity prices pulled back early as well as throughout the day. Lots of selling in oil and silver once again. Gold was down as well, but not as severe on a percentage basis. Lower energy prices would certainly be a welcome development for consumers and businesses alike.
It was a tough day for shares of Walt Disney ( DIS ) and Inergy L.P. ( NRGY ) as both companies missed earnings estimates. On the flipside, Macy's ( M ) and Teva Pharmaceuticals ( TEVA ) rallied on their quarterly results. Also higher were shares of Johnson & Johnson ( JNJ ) on the heels of an analyst upgrade. Analyst downgrades put a hurt on companies like Occidental Petroleum ( OXY ) and Archer Daniels Midland ( ADM ). Back to the energy sector, some of the hardest hit stocks today included Apache Corp [APA]], EOG Resources ( EOG ), and National-Oilwell Varco ( NOV ).
Despite the more than two-year-long rally we've seen in the markets, the number of people still avoiding investing in stocks remains high. I fear many of the sideline crowd will wait to come in on events like a Facebook IPO or something that is more about catching a quick move, while continuing to miss out on all the buying opportunities out there now. Last month's Gallup poll reported the percentage of Americans saying they hold individual stocks, stock mutual funds, or stocks in their 401(k) or IRA fell to 54% in April - the lowest level since Gallup began monitoring stock ownership annually in 1999. Considering how poor the interest rate returns are for savings accounts and Bank CDs, it's no wonder there is still a large majority of middle-class Americans feel the economy is the worst it has been in decades. As I've said time and time again, however, that's no excuse for not investing!
If you are going to build wealth, you need to adopt the mentality of consistently buying assets that produce income. This practice requires a sacrifice in spending on material goods as a natural part of the process. Put your money to work for you early and often, rather than spending it on things you don't need.
A great way to bolster your nest egg is to buy quality dividend-paying stocks that consistently raise their dividend payouts. Just this morning Intel Corp ( INTC ) raised their dividend for the second time this year (we began recommending the stock back in early April following their first raise). Companies are much more generous in terms of sharing their profits these days, which provides investors with a great way to hedge the inflation in personal costs (gasoline, food, etc.).
Remember, sitting with cash in a savings account that pays 1/10th of 1 percent interest will never get you anywhere close to building wealth. Warren Buffett, the world's most successful investor, makes his fortune buying dividend stocks and looking to acquire businesses that throw off loads of cash. You, too, can consider buying a business, as long as you do the proper due diligence. Income-producing real estate can also generate income, if the cash flow numbers can get you a profit every month. Finally, investing in yourself through secondary education, investment research, etc. is a no-brainer. Many investors subscribe to multiple investment services/newsletters to give them all the financial weapons they feel they need to make the most money they can. When I hear fellow parents at the baseball field tell me how much they spend on pitching/batting lessons for their kids, I know they can afford to invest at least that much in their own financial education. Get to work on buying assets that produce income and you'll be happy you did as the years go by!
Let's continue our series on what makes people successful with three more powerful anecdotes:
1. Successful people steer the money wheel, while others are herded like sheep.
I often write about being in control of the "money ball" and remaining on offense at all times. Simply put, you should keep personal debt to a minimum and investing capital at a maximum. The minute you succumb to shopping and credit card routines, focusing on accumulating material things, the quicker you are turned into just another sheepish consumer. Constant sales and holiday shopping will become your weakness and you fall into a downward spiral in the wealth-building process. Instead, keep your spending in check and use the money you save to invest in income-producing assets over and over again. This means regular monthly investments in quality dividend-paying stocks, looking for real estate deals that throw off positive cash flow, running a side business that produces more income, etc. Developing several income streams will put you in the driver's seat money wheel is concerned.
2. Successful people compete for the challenge of winning, while others are just happy to participate.
This one hits close to home, as we built Dividend.com with the intention to become the number one site for income-seeking stock investors. We didn't just want to have a "good" service - we wanted to make a splash and take the reins on a profitable investing technique that has worked wonderfully for the last 80-plus years. We did our research, developed our ratings system, made the right partnerships, produced quality content every day, and became the best dividend investing site in the world. But it doesn't end there! We're constantly striving to improve our service, listening closely to our customers, and giving them what they want (or demand in some cases!). Think about this strategy when it comes to your career or your own business. Don't just settle in and be part of the crowd. Do the extra things that will make you stand out and eventually lead you to your dream situation. Then once you get there, do even more to push yourself to even further heights and leave your competition in the dust.
3. Successful people look at their own decisions for any losing results, while others blame everyone but themselves.
I call this eating a piece of the ol' "humble pie." We all make mistakes, but the key is learning from them and never repeating the same mistakes again. The first step in this process is admitting guilt. How many times does pointing fingers ever really solve anything? Everyone loves to take credit when things go well, but few are willing to put their stamp on a failure. You'll earn a lot more respect from simply saying "my bad" when it is in fact your fault.
Thanks for reading, and I'll see you tomorrow! P.S. Please pass this e-mail on to someone you think can use some financial motivation as well as being kept in the financial news loop that could affect them. Thanks again!
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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