Market Wrap-Up for Nov.9 (DIS, AAPL, BID, PSA, WMT, more)
The markets saw a trickle of daylight as the powers-that-be are closely watching the market’s recent pullback post-election.
President Obama spoke earlier today speech and part of the subject involved freezing middle class tax increases. While this move may stem fears for some, all this move really means is further printing of dollars to pay for the ballooning deficits. With such a minute-by-minute focus on preventing any such economic slowdown or drop in market averages, the risk grows for the U.S. and its ability to one day pay off the enormous amounts of debt piled on the heap each day.
Getting into today’s market moves, earnings played a role in today’s action. Shares of Walt Disney (DIS), Sotheby’s (BID), and Microchip Technology (MCHP) did not participate in today’s early rally, following their earnings news. Public Storage (PSA) and Covidien (COV) did however, moving higher on better-than-expected earnings results.
Be sure to check out all of the latest earnings reports we’ve broken down on The Dividend Daily.
Should You Be Selling?
I can’t think of many good reasons to sell out of winning positions. Of course, if you are under financial duress and need the capital, then your real-life priorities take precedence.
When it comes to selling losers, I urge all investors to develop their own sell strategy they feel comfortable with. For example, you should closely examine any position in which a stock has fallen 25% from its 52-week highs. Most stocks that perform well will rarely see corrections that are greater than 20% their yearly highs under normal market conditions. Notice I said “normal” markets. When the markets are selling off in unison and undergoing a big correction (as we’ve been seeing since mid-October), it is best to avoid panicking on all your positions. You may want to tighten your portfolio some, but cutting quality companies in a panic is never wise. If anything, you should be stepping up and scaling into your positions more with a steady and consistent buying plan when market sell-offs hit otherwise strong companies.
If you own a stock that has broken away from a nicely-performing market and is seeing further and further selling, an immediate red flag should pop up. Be sure to examine the reasons carefully as to why the stock is dropping. These are the situations that separate the average investor from the great investor.
For example, there will be plenty of traders looking to move in and out of Apple (AAPL) shares following the recent dive, but unless you have the discipline to move quickly, playing that game will taint your vision of the markets (and undermine the entire reason why we invest in the first place). I can’t remember ever seeing daytraders on the list of the Forbes’ most wealthy, and there’s a good reason for that. Wealth is built from buying assets that produce income. Plain and simple!
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 Home Depot (HD), Wal-Mart Stores (WMT), Cisco Systems (CSCO), and Target (TGT), just to name a few. The focus will also continue to be on the economic data, fallout from the Presidential election, and as usual, the latest Wall Street analyst calls.