The markets were able to close out a solid week, albeit not on the high volume side, but we'll take the gains. The Dow gained over 500 points as investors looked to the big market cap names to show us the way.
Gold ( GLD ) prices perked up again (closing over $1800 an ounce) today, with gold-mining shares pushing into positive territory as well. Yamana Gold ( AUY ) in particular rallied following a Wall Street analyst upgrade. Speaking of gold, Donald Trump was shockingly in the news once again today, this time pumping both real estate and the yellow metal. Apparently, Mr.Trump is having an event where he will accept gold bullion instead of dollars for a lease deposit from his newest tenant in one of his marquee properties, 40 Wall Street. This move is intended to be a political statement as well, as Trump speaks out about the falling dollar.
Now, the old contrarian trader in me would be storing this as a potential "topping" anecdote when it comes to the gold frenzy. That said, as I mentioned yesterday, gold is trading near key technical levels that if aren't held, the downside could be below $1500 an ounce. I still only see gold as a trade for those who want exposure to the weakening dollar trade.
Elsewhere, shares of United Technologies ( UTX ) closed slightly lower on rumors the company could be looking to finance a big acquisition. On those rumors, shares of Tyco International ( TYC ) gained over 3% as the company was cited as a potential takeover target. Also, Goodrich Corporation ( GR ) rose 7% on those same rumors. As always, be careful if you are prone to chase Wall Street rumors. I'll admit, it's been tough not to keep a close eye on the financials following the news of the UBS ( UBS ) $2 billion loss, blamed on a rogue trader. The last thing investors want to hear about is unknown trading losses affecting any of the big banks that have been trying to climb off their 52-week lows. Retailers had a good day, with shares of Ross Stores ( ROST ), TJX Companies ( TJX ), and Target ( TGT ) all gaining nicely.
Easy Come, Easy Go - So You'd Better Pay Attention
An interesting but sad story came out of the sports world yesterday. It was revealed that former Baltimore Ravens Pro-Bowl cornerback Chris McAlister was broke, living with his parents, and trying to get his child support payments reduced. We have heard numerous stories about athletes going broke in the past, but it still amazes me and makes me think how easy it is to squander away everything you've worked so hard for. McAlister signed a seven-year, $55 million extension in 2004. Yes, that's right - $55 million! As I've written before, many lottery winners and well as athletes in the past have lost substantial fortunes due to bad spending and investing decisions.
Investing doesn't mean taking unnecessary risks and swinging for lottery-style returns. Use common sense when you are evaluating opportunities in the markets, in business, and even in your career. Remember, there is no easy road to success. Too many people watch from the sidelines and then analyze how they could have done the same thing, but that's a tired song. Finally, patience is paramount when it comes to letting your successes build. In investing specifically, compound interest is a huge ally if you allow your investment income to grow. This is why I stress to our readers that the trend of rising dividend payouts and profits will keep many portfolios ahead of any potential inflation threat.
Cutting Through the BS
How many people remember this famous line from the original "Wall Street" movie when Michael Douglas' Gordon Gekko character goes on a rant to Charlie Sheen's Bud Fox character:
"The richest one percent of this country owns half our country's wealth, five trillion dollars. One third of that comes from hard work, two thirds comes from inheritance, interest on interest accumulating to widows and idiot sons - and what I do, stock and real estate speculation. It's bull****. You got ninety percent of the American public out there with little or no net worth. I create nothing, I own. We make the rules, pal."
I'm guessing the "interest on interest" line could be referring to compound interest and, quite possibly, dividend-paying stocks. The line really hits hard when you think about the money that has been made - and more importantly lost - over the last few decades, and likely for the next few decades if people aren't careful about where their money is invested. It is true that there is a lot of BS when it comes to what stock market pundits and analysts see as worthwhile investments. Lots of times there will be tremendous amounts of underlying conflict of interest.
At Dividend.com, we successfully rode out the storm of 2008 through the spring of 2009 by tightening up on the names we were recommending for new capital. It's about allocating money to the best positions possible during various times of the investing cycle. We have been making numerous changes to get our Best Dividend Stocks List in the best shape possible for any prolonged downturn. We don't advocate blindly buying every stock's drop, which is what most of Wall Street's research tends to want you to do. It's easy to get frustrated sometimes and feeling like you will never understand what happens on Wall Street, so I take it upon myself and my Dividend.com team to focus on the key things investors need to know. We then break down these events and explain how they can affect your financial outlook in the simplest way possible.
Looking ahead to next week, we'll start to see a slight uptick in quarterly earnings as we will feature results from FedEx ( FDX ), Nike ( NKE ), Darden Restaurants ( DRI ), and more.
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 .
Created by Dividend.com