Market Wrap-Up for May 8 (WYNN, TAP, PBI, MCD, FOSL, GLD, more)
Posted on May 08, 2012 at 16:06 PM EDT
The markets are again beginning to “price in” concerns about the seemingly never-ending Greece bailout saga. Today’s early sell-off should not have come as a surprise to newsletter readers, however. We all know you can not put out a big fire with a couple of buckets of water. One bailout tends to lead to a [...]

The markets are again beginning to “price in” concerns about the seemingly never-ending Greece bailout saga. Today’s early sell-off should not have come as a surprise to newsletter readers, however. We all know you can not put out a big fire with a couple of buckets of water. One bailout tends to lead to a second, then a third, and so on. The negative headlines will certainly cause angst in the short term, but pullbacks tend to create buying opportunities in the highest-quality dividend stocks, as we saw happen during the afternoon session.

Looking at today’s headline movers, earnings results did not help shares of Pitney Bowes (PBI), Wynn Resorts (WYNN), or Molson Coors (TAP). Also, shares of McDonald’s (MCD) moved lower after the fast-food giant reported April sales that came in below expectations. On days like today, high-beta stocks tend to get hit much harder than most. Look no further than what happened to Fossil Inc. (FOSL), which lowered its outlook and closed down $47, or -37%. It wasn’t a good day for Gold (GLD) investors as the yellow metal fell to multi-month lows despite the global economic concerns. The flight to safety trade failed to deliver today.

Don’t be the “Rabbit”

As I drove home from the office this past Friday afternoon, I was listening to some sports commentators previewing the Kentucky Derby, which ran on Saturday. In speaking about some of their favorite horses, one of the radio personalities call the horse a “rabbit.” In horse racing, the rabbit describes a horse that tends to lead the field of horses out of the gate and sets the pace for the entire race. Eventually, however, the rabbit falls back to the rest of the pack, unable to keep up its initial frantic pace.

Some investors also fall prey to the “rabbit” phenomenon. They come out of the gates with guns blazing, plan in hand, and a promise to commit money to their well-researched investments. However, at some point, the initial euphoria dissipates. Then what was originally a sound plan becomes simply a neglected brokerage account that shows little to no activity over time.

It’s not hard to avoid being the rabbit. Just pick a particular day of each month (let’s say the 15th), and on that day do some research to find one good stock idea. Just use our Dividend.com Premium service to find your new favorite name on our Best Dividend Stocks List. If you’re just starting out, then your goal at a minimum should be to buy one stock per month. Within a year, then, you’ll have the 10-12 dividend stocks that make up the initial core of your holdings.

Every day provides an opportunity to get started in your pursuit of getting rich. Become productive and you’ll soon be making big strides, instead of just flying blind and accepting your financial fate. You will soon see every decision you make either having a meaningful impact on your road to wealth, be it positive or negative.

Getting back to the derby, the horse they were talking about on the radio, named Trinniberg, started the race with a bang. He stayed in the top three for much of the race, but eventually finished in 17th place out of 20.

So the message is clear: pace yourself and make sure you’re prepared lifetime of investing, not just a quick sprint and fall.

Lottery Spending Binge

I just read an anecdote illustrating how strong lottery ticket sales were in the past year in New Jersey (where Dividend.com is located). The biggest spike occurred in the Power Ball game, which saw an 87% rise in sales from last year. Here we see the classic “swing for the fences” mentality taking over. Despite a near-zero chance of winning anything, millions of (mostly lower-income) people toss money into the lottery system, instead of wisely investing their money on the “slow and steady” route.

There’s a much easier way to become a millionaire, after all. It doesn’t take a large sum of money to achieve great results, but you will need some time and patience. Investing just $3,000 into dividend-paying stocks over the course of 5 years and automatically re-investing the dividends over the course of 56 years will grow to over $1 million (based on historic 11% annual returns for dividend stocks price growth plus dividend payouts). Most people may not be thinking that far out, but when you consider only having invested $3K to get to that total, think how much wealth you could compile you if you commit to putting even more money to work, year after year.

Income, Income, Income

At Dividend.com, we maintain our focus on the best income-producing investments the markets have to offer during time of heightened volatility. We want to make sure we have only the most pullback-resistant names on our Best Dividend Stocks List. Also, if we see the market putting in what looks like a decent bottom, we will be prepared to scale up the list of stocks we like. Stay tuned and be sure to look for Dividend.com Premium member alerts along the way. Don’t count on the government or your employer to set you up for a remarkable retirement. Take control, do your own research, and achieve your goals yourself!

Go Beyond This Newsletter

We know many of you enjoy reading the daily newsletter, but remember that with our Dividend.com Premium service, the newsletter is just one small component of what we offer. Here are the “Big Three” benefits of our Premium service:

- The Best Dividend Stocks List is used by tens of thousands of investors to help build their own portfolios.

- Creating your own Watchlist allows you to track the performance, news, and upcoming dividend payouts of the particular stocks you care about.

- Finally, we offer the most complete and easy-to-use dividend data on the web. Many subscribers use this data as part of a “Dividend Capture” trading strategy, but long-term investors can use it to keep track of impending payouts. Just visit our Ex-Dividend Calendar for a complete outlook on which companies will be paying out soon.

We don’t ask for a credit card to use our free trial, and we don’t bill you when your trial ends. No obligation whatsoever! So keep enjoying the newsletter, but please give Dividend.com Premium a shot if you haven’t already subscribed!

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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