Market Wrap-Up for Sept.28 (ACN, JBL, DRI, CAT, DE, MJN, more)

There is an old Wall Street adage that says investors should sell on Rosh Hashanah and buy on Yom Kippur. I haven’t quite seen a study on how successful this strategy would be, but I will pass along any anecdotes if I run across some data supporting it.

Looking at today’s market action, we saw an early pop soon give way as sellers took over the action by the close. Earnings reports were plentiful this morning, and the news was good for companies such as Jabil Circuit (JBL) and Accenture (ACN) (both did pull off their intraday highs), while not as good for Darden Restaurants (DRI) and McCormick & Co. (MKC). An early upgrade of industrial/cyclical plays, including Cummins Inc. (CMI), Deere (DE), and Caterpillar (CAT) failed to have much of an impact as all three names finished poorly on the day. Finally, some of the higher beta, low-dividend yield winners this past quarter saw some profit-taking, including Mead Johnson Nutrition (MJN), Carbo Ceramics (CRR), Estee Lauder (EL), and Ralph Lauren (RL).

Gold (GLD) and Silver (SLV) prices could not muster much momentum today after finally seeing the recent price slide come to a halt yesterday.

The Rosh Hashanah holiday begins today at sundown and ends tomorrow at sundown, so expect some lighter-than-normal volume in tomorrow’s trading session.

Inflation Will Find You

The average annual cost of a family health insurance policy climbed 9% in 2011 to $15,073, according to a poll of 2,088 private companies and state and local governments by the Henry J. Kaiser Family Foundation and American Hospital Association’s Health Research and Educational Trust. This increase is the biggest since 2005, and costs are projected to reach staggering $32,175 for a family by 2021.

This trend certainly puts more pressure on corporations and small businesses trying to factor in fixed costs as they look forward with their projections. Rising costs hamper companies’ ability to grow (hire new workers) and raise compensation (wage increases).

Employees are paying 28% of healthcare premiums on average for family plans this year, similar to last year. The proportion of health insurance premiums paid by workers has risen 131% since 2001, however. Sixty percent of employers said they offered medical benefits this year, a decrease from 69 percent in 2010.

Companies are offsetting escalating healthcare costs by offering higher deductible premiums. This year, 17 percent of covered workers were enrolled in such plans, compared with 13 percent last year and just 8 percent in 2009.

How Investors Are Fighting Fixed Cost Inflation

I have talked about several strategies investors can use to help offset inflation. As always, your biggest ally is buying assets that produce income. The Financial Times just highlighted the fact this past weekend that U.S. investors have put $2.5 billion in Exchange Traded Funds that track dividend-paying stocks since July.

Your wealth will only deteriorate if you don’t acquire income-producing assets. Taxes and inflation (despite what the government says, prices ARE higher for many everyday items) will chew up accounts of those who let their money rot. And as I’ve said before, The Federal Reserve is clearly not on the side of the saver these days. The Fed has pledged to keep rates at all-time lows for the foreseeable future. Now there’s nothing wrong with raising cash if you want to, but sitting on that money for long periods of time will never provide you with good best investment returns.

In investing, compound interest is a must-have tool if you allow your investment income to grow. That’s why I stress to our readers that the trend of rising dividend payouts and profits will keep many portfolios ahead of any potential inflation threats.

Taking too little risk is a big problem for seniors as well. There aren’t many investment vehicles out there that will allow you to outpace taxes and inflation. Interest rates are historically low, so money markets and checking accounts really have nothing to offer. That’s why we love dividend stocks so much!

Even if health care costs aren’t factor in your specific situation, a forecast out from the Department of Agriculture yesterday said food price inflation will likely persist in 2012, with prices expected to increase 2.5% to 3.5%.

Keeping up with inflation is critical, and the income generated from quality dividend-paying stocks should be a key part of anyone’s strategy.

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!

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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