As far as the markets went for much of morning, I think one word would sum things up perfectly: “trendless.” However as the afternoon went on, we did see a bit of buying from investors.
Looking at some of the day’s big movers, we saw a bit of bounce for recently beaten-up commodity and financial plays, including CF Industries (CF), Joy Global (JOY), JP Morgan (JPM), Capital One Financial (COF), and Prudential (PRU). Starbucks (SBUX) shares fell following news of the company’s $100 million bakery acquisition. Also selling off were shares of Fastenal (FAST) following the company’s May sales guidance. Their news also hurt shares of competitor W.W. Grainger (GWW).
Despite the recent pullback in the public stock markets, the private markets, where start-ups are growing and disrupting current industries, are still running strong. Companies in the private space are still being acquired for significant multiples of revenue. Many companies are also able to raise tens and even hundreds of millions of dollars in financing.
I like to follow this development because it relates to the public markets. Public companies are clearly still confident paying a premium for much smaller entities. Granted, some acquisitions may be out of fear that upstart companies could disrupt the acquirer’s current business. When the spigot is finally shut off to these private acquisition targets, it could then be a sign that valuations (both public and private) may have some downside. We haven’t seen anything to indicate a slowdown yet, however.Getting Back in the Box
It’s been quite an eventful year helping coach my son’s baseball team. One player in particular has had the misfortune of being hit by opposing pitchers multiple times, mostly early in the season. As a result, this young man stopped swinging the bat altogether. Instead, he simply jumps out of the batters’ box each time a pitch is thrown.
The other coaches and I have worked on getting him to avoid this “bailing out” behavior. The process hasn’t been easy, of course. As time went on, however, the young man began developing some confidence and actually swung the bat again. Even though he’s struck out a couple of times, it’s clear he’s been making strides. Toward the end of one recent game, he drew a walk from the pitcher. Later in the inning, he came flying around the bases and scored a big run for us. He got to the bench and his teammates met him with high fives and praise. All he had to do was get back in the box and start swinging again!
For investors, the recent market pullback is similar to being hit by a pitch in baseball. It stings to see shares of companies you own fall. Just remember, with dividend stocks, the gial isn’t to see instant profits following a purchase. Instead, dividend investing is about buying income-producing assets as part of your long-term wealth-building plan.
So if you’ve become gun-shy following the recent market downturn, I suggest you try getting back into the box. Don’t be afraid to swing the bat again just because you’ve been hit a few times.Manning the Controls
As the markets continue to gyrate, we’re dedicate to making any and all ratings changes necessary to ensure investors that are committing new capital only to the best possible dividend stocks. If we think a stock needs to be removed and profits be taken, we’ll make the call. If we think a recent recommendation needs to come off sooner than one would expect, but is still a name worth holding, we’ll make the “hold” call. We are closely tracking the indices, fundamentals, economic data, and other factors that can affect the markets — you can be assured of that.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
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Thanks for reading everybody. I’ll see you tomorrow!