December 27, 2012 at 16:22 PM EST
Market Wrap-Up for Dec.27 (JPM, C, AXP, AAPL, more)

I noticed quite an amazing stat out of this morning’s new home sales data. Out of 377,000 new homes sold in November, only 500 of them had a price tag over $750K.

Now I’m not advocating being “house rich” (sinking all of one’s money into a giant home), but data points like these can’t be good signs for consumer spending or real estate investment. With the high end of the real estate market working off of these abysmally low numbers, it’s clear that we’re far away from a real housing or economic recovery. The national media tends to leave out these anomalies in the numbers when they report the news. Either they’re too lazy to look, or simply afraid of what they’ll actually find!

Getting back to the markets, continued rumblings over the lack of a fiscal cliff resolution had the averages gyrating once again, with the indices closing off the lows of the day by the close. The financial sector felt some of the weakness today with names like Citigroup (C), JP Morgan (JPM), and American Express (AXP) all closing lower. In another big story, tech bellwether Apple (AAPL) continues to flirt with the recent $500 support level. Many traders continue to see the stock’s weakness as an overall concern for the markets.

Turning It On When You Have To (The Success Trap)

I always enjoy listening to sports talk radio while I drive, especially when fans call into the shows and offer their personal take on how a team can turn its fortunes around. There isn’t much to cheer about for my New York Jets, but the New York Giants had a decent shot to make the NFL playoffs (up until this past weekend that is).

Giants fans kept reminding themselves the team would “turn it on when they had to.” They kept the faith the team would still make the playoffs and go on a run like they did last year, when the Giants barely made it to the postseason yet still won the Super Bowl. It’s funny how fans and people in general assume a pattern will easily repeat itself — regardless of how low the odds are (by one analysts’ calculations, the Giants have an 8.5% chance to make the playoffs this year, let alone making yet another improbable Super Bowl run).

In most cases, mediocre efforts will be met with mediocre results. It’s very rare for a team or individual to perform at a low level for quite some time, then suddenly find that magic recipe of success. Back in high school, one of my best friends would often pull all-nighters the day before a paper was due, often not starting it until the last minute. He was quite successful at this practice until his first year of college. Within three months of starting his college career, he dropped out. The workload and expectations didn’t jibe with the last-minute habits he had developed. Skip the preparation, and odds are, you’ll fall flat.

When I dedicated years of my life to trading full time, I didn’t wake up at 9:00am with the markets opening at 9:30. If I did that, my trading career would have been over before it started. Instead, I awoke at 6:00 am to map out the day’s possibilities. This was even after doing much research long after the closing bell each trading day. That is the type of dedication it took to succeed.

I know basketball is a different sport than football and injuries may not be as numerous or serious, but let’s think of Michael Jordan’s success for a moment. In the six years his Chicago Bulls won the NBA title, the team had a combined regular season record of 388 Wins to just 104 losses. Winning was the one constant that persisted in their road to building a dynasty — both in the regular season and the playoffs. Michael Jordan knew that playing .500 ball during the regular season wasn’t the recipe to winning titles. He treated every game like a “must win” and forced his teammates to do the same. Jordan’s preparation and dedication to winning every time was a big component of his success.

Despite some of the business successes I have seen around me, there are still way too many individuals that let apathy pull them farther and farther away from their dreams. Too many believe they will have the time to turn things around or get back on track. They don’t realize that they longer they wait, the harder the road to success will eventually be. Good luck to the Giants making the playoffs this year, but their regular season performance really doesn’t reflect a team with championship aspirations. Because of their mediocre play this season, the team will need to win its final game this Sunday and have three other games go their way to make the playoffs.

As you can probably see, your destiny isn’t always in your hands — and most of the time it is no one’s fault but your own.

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Dividends Really Matter

Financial blog DailyReckoning.com recently took a look at the difference dividend payouts made in the overall return investors saw throughout the prior decades. Here are some of the highlights:

- The Nasdaq is down 28% since the end of 1999. Even the “blue chip” S&P 500 stocks are down 15% during that time frame…until you add back those “boring” dividends. With dividends included, the S&P 500′s 15% loss flips to a 6% gain.

- Without dividends, the S&P 500 index would have produced a loss for the 25 long years from August 1929 to August 1954. Then again, without dividends, the S&P 500 produced a 5% loss during the 13 years from September 1961 to September 1974. But with dividends included, the S&P’s loss became a 46% gain.

- Over the course of the last half-century, dividends have contributed more than half of the stock market’s total return — 56%, to be exact.

Of course, you can’t discuss the potency of dividend investing without making mention of how awesome compound returns are. I can’t stress enough the power of compound interest: you take a small amount of money and turn it into a large amount over time. Finding the right companies at the right price points which not only grow earnings, but also grow their dividend payouts as well!

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Thanks for reading, and I’ll see you tomorrow!

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