Today’s tape has been all about the monthly jobs number, which came out much better than anyone had expected. You would have thought the market would be off to the races, but that kind of wasn’t the case. In fact, the indices ended mixed, as no fiscal cliff progress coming out of Washington remains part [...]
Today’s tape has been all about the monthly jobs number, which came out much better than anyone had expected. You would have thought the market would be off to the races, but that kind of wasn’t the case. In fact, the indices ended mixed, as no fiscal cliff progress coming out of Washington remains part of the cloud overhanging the markets.
Looking at today’s tape, there weren’t many central themes going on, but we were watching everyone’s favorite stock, Apple (AAPL), which lagged the indexes once again. Wall Street analyst calls also had a bit of an impact, as McDonald’s (MCD) and Freeport McMoran (FCX) received some positive notes in the face of recent declines. Also, Yum! Brands (YUM) continued its recent dip lower following further Wall Street caution expressed on the name.
Take Your Seat at the Table — But Don’t Expect to Stay for Long
Many casinos have big poker rooms with tables that can fit over a dozen payers. You can only play when a seat opens up, of course. If you ever go during the week, you will likely see mostly the same faces. It is on the weekend when the new faces make their appearance (or fresh “meat” as the steady poker players like to say) with wide eyes and a wallet full of “discretionary” income. They will come to make a killing as they have been watching the “Poker World Series” all week and they will mimic what they see from their poker heroes on TV.
These green (inexperienced) players don’t realize how difficult the game really is. They can’t simulate how they’ll react during actual play, with real money at stake — not just sitting at home on their couch or playing in a friendly game with a bunch of friends.
Stock trading is no different. Much of today’s volume is dominated by institutions and hedge funds that are using every weapon at their disposal to ride every wild swing. The business media today has catered their message to keep up with what is moving quickly. Retail traders are constantly playing catch-up. But when money meets manic markets, the disappearance of traders’ capital happens all too quickly these days. Once a trader loses some money, human nature turns to making it all back, and that usually means find the most volatile stocks — or even worse, playing in the below $5 a share names. Low prices mean more shares that one can afford, but unfortunately the names that tend to rarely cooperate with one’s hope to make up for lost capital.
I say it time and time again: to build wealth, you need to own assets that produce income. If you want your net worth to increase substantially, you’ll need to invest instead in vehicles that consistently generate cash flow for you. Based on the data we’ve seen from the past 80+ years, quality dividend-paying stocks are the best bet for most people. Harness the power of compound interest that dividends provider, and over time, you can turn a small amount of money into a large amount. All you need is a little patience and consistency to get your finances headed in the right direction, as well as staying out of the “poker room”!
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Looking Toward Next Week
Looking ahead to the next week for stocks, we will see earnings results from the likes of Costco (COST), Joy Global (JOY), and Darden Restaurants (DRI), just to name a few. Throw in the latest economic data and fiscal cliff updates, and investors will have plenty of news to absorb as usual.
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