Market Wrap-Up for Apr.30 (SUN, KO, MSFT, BKS, NYX, MNST, more)

The markets pulled back a bit as we started the new trading week, partly on news surrounding this morning’s Chicago PMI data. The latest PMI info showed business activity in the U.S. Midwest slowed more than expected in April, falling to its lowest since November 2009 as new orders slipped.

We didn’t see too many earnings results yet this week, but the pace will surely pick up tomorrow. However, M&A/partnership news helped move several names. Shares of Sunoco (SUN) closed up 19% on news it will be acquired by Energy Transfer Partners L.P. (ETP). Also spiking higher were shares of book retailer Barnes & Noble (BKS) on news Microsoft (MSFT) will invest $300 million in book retailer Barnes & Noble Inc’s (BKS) digital and college units. There were likely plenty of short-sellers having a tough morning, as BKS shares, which closed at $13.68 on Friday, were recently trading a touch above $22 a share. Ouch! Elsewhere, we saw selling in earnings-related plays Humana (HUM) and NYSE Euronext (NYX). Coca-Cola (KO) shares edged lower on rumors the company is preparing a major takeover offer for competitor Monster Beverage (MNST), or possibly a strategic partnership.

Sell in May and Go Away? Not Quite

As we get set to start the month of May tomorrow, pundits begin to tout the age-old “sell in May and go away” strategy. As is the case with many pieces of “conventional wisdom,” this strategy is by no means fool-proof. If you’d sold in May 2009 and stayed in cash, for example, you would have missed out on incredible gains.

Furthermore, dividend investing isn’t about trying to time the markets (which is nearly impossible to do, by the way). Instead, dividend investing is more about consistently investing each month and stockpiling dividend payouts. So if you are a long-term income investor, ignore the scuttlebutt from the media, and proceed as dividend investors always do: searching for the best ideas to invest in month after month.

Look Ma, No Revenues!

The New York Times ran a great story this past weekend about how start-ups are being advised by venture capital investors to hold off on producing any revenue early in their company’s development. This strategy allows the big money chase to push valuations higher and higher as the start-ups raise rounds of financing.

We just saw Instagram acquired by Facebook this month for $1 billion, and the company had zero revenues. This trend will last until the spigot shuts off, usually whenever the stock market has a deeper pullback. When that will be is anyone’s guess. You can be sure, however, that the wider (mostly oblivious) media will pick up on the start-up valuation insanity long after the correction happens. In the meantime, the stories can’t help but make great television.

Investing in People

It’s funny how the sports world never seems to learn its lesson regarding investing big money in athletes with questionable character issues. One of the big stories out over the weekend highlighted an NFL draft pick selected in the second round. Supposedly, the player had a great deal of talent, and could have been drafted in the very first round.

The player had some personal issues when playing at a big-name college, however, and eventually was forced to transfer to a much smaller school to play college football. Additionally, the young athlete has reportedly fathered four different children with three different women (by the age of 23, mind you). If I were looking to invest in talent, whether it was sports-related or not, I’d be looking a bit deeper to see if the risk/reward made any sense to pursue.

Whether you are building an organization, or even looking for that perfect spouse, you should pay close attention to any character issues with your prospects. No one is perfect, but rolling the dice on a person with obvious flaws generally isn’t a good idea. One lesson I learned from my parents was that when something was very difficult in the beginning, it would probably get even more difficult later on down the line. This rule of thumb is one of my favorites, and I suggest you share it with your own kids and grandkids.

In business, the top organizations tend to scope out their talent pool with a microscope. This fact means that young folks should be very careful in their decision-making process. You’d be surprised how important character is when it comes down to deciding between several candidates.

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I hope everyone had a chance to check out our Premium members-only weekend articles , including new features that highlight some of the biggest winners and losers from the week that was, such as 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.

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