As market watchers waited nervously for the open of today’s market action, we stayed busy doing what we normally do. More on this and other sell-off “anecdotes” below.
Wall Street analyst calls were making the early headlines. On the positive side, one of our favorite pharma names Bristol-Myers Squibb (BMY) is up on positive commentary surrounding recent company drug data. On the flip side, cautious commentary had stocks like Cummins Inc. (CMI), Yum Brands (YUM), and Charles Schwab (SCHW) down a bit. Oil prices were able to bounce off some early fresh lows, but investors still need to proceed with caution when it comes to the sector.
Over the weekend, the business media did its best to “prepare” investors for the new trading week. CNBC actually ran a “Markets in Turmoil” special Sunday night — as if there wasn’t already enough sensationalist headlines breaking every five minutes during the week.
News viewership continues to decline, and the only way for networks to counter that trend is by turning up the volume on thing they think can move the stock tape. All along the way, the quality of programming continues to suffer. Most investors have probably seen the usual segments with multiple guests offering sharply differing opinions, all screaming above one another. This kind of nonsense is somehow supposed to be helpful to viewers?
Here at Dividend.com, we have no such need for network shenanigans. Unlike major news outlets, we don’t simply bow to advertisers’ demands for higher ratings. We spent our weekend doing what we’ve been doing for years: running through our research notes to adapt to an ever-changing market. Remaining flexible on the investment landscape is a necessary component of building wealth.Recent “Sell” Calls Causing an Uproar
One thing readers must understand is that our calls (upgrades/downgrades) are based solely on our industry-leading market research. When we see danger ahead for a names we previously recommended, we’ll occasionally be compelled to advise a “Sell” — regardless of how long ago the stock was recommended (or at what price).
Sell calls are hated, and again, we don’t make many of them. 99% of the time, our downgrades just mean to “Hold” the stock. But sometimes, our responsibility dictates a “Sell” call. These rare moves always seem to generate negative feedback from our loyal subscribers, and we’re willing to accept that feedback. Think about it: we can choose not to issue a “Sell” call (despite strong signals the stock will fall) and have no negative feedback, or we can bite the bullet, absorb the backlash, and simply move on. It would certainly be easier to do the former, but such a decision doesn’t jibe with our mission here at Dividend.com. Unlike most services out there, we put the best interest of our subscribers first and foremost. We don’t really care if a decision we make is unpopular — we simply make the best possible calls we can at the best possible times.
In summary, we are not a trading service. In fact, we advise against trading for the vast majority of all investors. We are a long-term investing service with relatively low turnover. We do not advocate getting in and out of stocks on a daily basis, but we do reserve judgment to change our opinion when we see evidence worthy of doing so.The Yield Chase Fades (and That’s a Good Thing)
As 2011 drew to a close, we saw a lot of hoopla around fund managers “chasing” yield. We enjoyed the share price pop in many of the top dividend plays, but as we noted back then, the buying may have been overdone. Accordingly, we began taking a close look at our recommendations to make sure their price points still made sense for new investor money.
Fast forward nearly six months, and some of the stocks we got cautious on are starting to look better again. We’ve got plenty of names on our radar for possible upgrades, and we’ll keep subscribers abreast of any changes. Unlike a lot of market analysts, we don’t like playing the contrarian card (i.e. saying “buy” when everyone is selling and vice-versa) just for the sake of playing it. Instead, we let the data we parse through tell us when to slow down the buying and head to the sidelines in particular names, or be ready to upgrade names at attractive entry levels for long-term investors.
We know the recent sell-offs can be frightening, but if you are putting money to work on a regular basis, timing shouldn’t be much of a factor in your process of building a profitable portfolio. Avoiding a trader’s mindset is the best thing you can do — regardless of whether the markets are volatile or not. Rest assured, we realize how significant our work is for investors who are true believers in the message of dividend investing!Our Beat The Markets with Dividend Stocks eBook Has Arrived!
We just debuted our brand new 275-page eBook, exclusively on Dividend.com! In this digital-only book, we look ahead to 2012 and the main factors that could affect dividend investors. A $39.95 value, the eBook is a free download for paid Dividend.com Premium subscribers.
Beat The Markets with Dividend Stocks contains a full economic forecast for 2012, including in-depth analysis on 65 of the biggest dividend stocks out there. It’s a great way to get prepared for your investing next year! So head over to the Dividend.com Premium homepage now to download your copy.
I hope everyone had a chance to check out our Dividend.com 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!