The market was looking to rebound after a tough first day of the week yesterday. We didn’t get much of a catalyst coming from the markets overseas however, but we did manage to close the indices higher at the end of the day.
Looking at today’s headline names, positive Wall Street analyst comments had shares of JP Morgan (JPM) and Hershey Company (HSY) higher, while cautious comments led chemicals giant Dow Chemical (DOW) lower. Gold-mining shares were quite weak with the price of the yellow metal spending much of the day in the red. Leading the way lower were shares of Barrick Gold (ABX), Agnico-Eagle Mines (AEM), and Newmont Mining (NEM). Lastly, shares of Best Buy (BBY) were active late on reports the company may be hiring an advisor for a possible buyout scenario.
We continue to see well-known brands get more and more expensive on a valuation basis, as traders/investors spend their days looking to put money into stocks that are trading in the green on weaker market days. From a long-only trader’s strategy, I understand the approach, but if you are looking at risk/reward from a long-term standpoint, things could backfire.
We’ve seen a similar problem with REITs, whose current yields are near historic lows. We may have been a bit too careful regarding the REITs, as some of the names have levitated higher despite our cautiousness. In a world that is starving for income yield, investors are walking a fine line with stocks that are seeing yields push well below 3% and even 2%. If and when there is a reversion to the means, chasing low yields will look like a reckless portfolio strategy.
When you lock in to the idea of needing to see day-to-day performance, you are setting yourself up for likely disappointments. Instead, I suggest scaling into quality dividend names that have come down in price, affording better long-term entry points. It’s up to investors to decide which way their investing style will ultimately go. If you are day-to-day, then it will be about chasing the flavor of the day — and being glued to your television set to see what the next piece of breaking news will do to your positions. I’ve been there and done that, and I would certainly advise against it.Dividend Stock Removed from Recommended List
We removed another dividend stock from our Best Dividend Stocks List this morning. We still like the name, but would wait to add new money to the shares for now. Check out the name we downgraded along with a full explanation here.Income, Income, Income
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Thanks for reading everybody. I’ll see you tomorrow!