The last unemployment numbers before Election Day came out today and despite better-than-expected numbers, the markets decided to give back the bulk of yesterday’s gains.
The markets had initially liked the jobs numbers, but investor buying quickly disappeared. As for stocks in the headlines, earnings news once again dominated the biggest movers list. Starbucks (SBUX) shares had a good share of investor excitement over better-than-expected numbers and news of the company’s dividend hike. Elsewhere, shares of Beam Inc. (BEAM) and Ralph Lauren (RL) also moved higher on earnings beats. On the flipside, investors sold earnings news from names like Newmont Mining (NEM), Fluor Corp (FLR), Republic Services (RSG), Chesapeake Energy (CHK), and Pitney Bowes (PBI). Lastly. Shares of Apple (AAPL) dipped below their 200-day moving average for the first time in over a year. It will be interesting to see how this bodes for other tech names.
With reports coming out by the hour, number crunchers are trying to place bets on how much Hurricane Sandy will amount to in losses, the effects on the economy, and inevitably the media’s favorite focus: who are the winners and losers? I can save you the answer on the last one.
The stocks everyone has been piling into with renovations, rebuilding, and consumer spending being the central theme may not do much of anything over the next 12 months or so if history is any indication. Home Depot (HD) and Lowe’s (LOW) were trading lower a year after Hurricane Katrina, while machine giant Caterpillar (CAT) shares were flat. Wall Street will do its best to get Hurricane Sandy in every investor’s rear-view mirror as soon as possible, and with any big event that occurs, the shock and awe eventually does pass (often sooner than you think).
With election day just days away, we will certainly see the focus shift some from the miles-long gas lines and power black-outs affecting millions to the next big story. All I can say is to not dismiss the impact we have seen from what a major weather event can do to an economically gigantic northeast region. From what I’ve heard, Sandy may not be the last encounter those of us on the east coast will have with Mother Nature in the years ahead.Decisions Will be Made (Eventually)
The eventual fallout from Hurricane Sandy is impossible to predict, but you can bet that such a disastrous event will prove to reshape people’s feelings on a number of issues. One big change may come in regards to real estate.
Dotted all along the Jersey Shore are multi-million dollar properties (second homes for some, and the bulk of a retirement nest egg for others). Living or working so close to the ocean is truly a dream for many, but there is always that fear of “what if.” For myself, owning a small office condo at the shore, where our Dividend.com office is located, doesn’t cause me too much concern. However, if I owned an expensive home on the beach, I’m sure my worries would be magnified.
Insurance can help alleviate one’s worries about potential storm damage, but the bigger picture (and one I am sure many have been thinking about these last few days) is this: will the appeal of owning some of these picturesque properties make them as investable as people used to think they were? Many second-home beach communities have already seen values drop considerably in recent years, so the markets are already pretty weak in many areas. Now with the widespread damage from the massive recent storm, these ultra-pricey properties may not be so desirable. These are the type of real-life options many folks are contemplating as we speak.
In stock trading, one is conditioned to react quickly to news events that can affect positions they are in, or positions they are considering. This is not the case when it comes to one’s career, deciding where one wants to live, renting vs. owning, who to marry, etc. Dividend investing fits in the latter equation as well, especially when brands we used to think were immune to trouble, eventually cut their dividends and sometimes suspend them indefinitely.
As a result, I constantly preach the importance of paying attention to the companies in your portfolio. Don’t believe me? There are plenty of Avon (AVP) shareholders in disbelief following this week’s dividend payout reduction. These investors wouldn’t have been surprised if they’d been paying attention to our ratings reductions on the stock over the last couple of years, along with several other warning signs, particularly a share price trading at 12-year lows.
While many people will take as much time as possible to make a decision, make no mistake, there will be others who react sooner, sometimes for the better and sometimes for the worse. No one can predict the future, but we can all certainly pay close attention to the factors surrounding our money. Important decisions require careful deliberation. Just be sure to actually make the necessary actions once you do your homework. Whether you’re considering owning a shore home or a particular dividend stock, these factors are essentially the same.Looking Toward Next Week
Looking ahead to the next week for stocks, third quarter earnings will continue to come our way. On tap are results from the likes of CVS Caremark (CVS), Prudential (PRU), Qualcomm (QCOM), and Time Warner (TWX), just to name a few. The focus will also continue to be on the economic data, the Presidential election, and as usual, the latest Wall Street analyst calls.