It should come as no surprise that Europe is now pulling out their own version of the “printing press” to handle their economic crisis. “Kicking the Can” isn’t hard to resist, especially when you see how the markets react to accommodation in the short term. Long term, however, these methods may be built more on [...]
It should come as no surprise that Europe is now pulling out their own version of the “printing press” to handle their economic crisis. “Kicking the Can” isn’t hard to resist, especially when you see how the markets react to accommodation in the short term. Long term, however, these methods may be built more on hope than reality.
Not to dwell on much negative news from this morning, but we’d be remiss not to mention the fundamental earnings shock we got from Nike (NKE) last night. As an investor, you can not ignore the fact that earnings are what ultimately determine a stock’s share price. If Nike is any indication, the third quarter earnings picture could be quite treacherous to maneuver for investors (and potentially fatal for traders betting the wrong way in the short term). We could see opportunities arise of course from over-reactions, which we will certainly be looking out for.
Elsewhere, earnings results pushed shares of Accenture (ACN) higher, despite the company tightening up its profit guidance. Wall Street analyst upgrades helped boost stocks like Oracle Corp (ORCL) and Vail Mountain Resorts (MTN). On the flipside, cautious commentary brought down shares of Ford Motor Company (F). One of the unfortunate parts of today’s spike is the surge we saw in oil prices (up over $7 a barrel today or 9%), as well as many other commodities. Inflationary costs running back up on the back of a stimulus/bailout plan isn’t exactly great news for everyday folks — especially since we’ve seen so very little job growth here in the U.S., despite all the bailouts.
Make a Call, Make a Market
I’m still astounded by some of the moves Wall Street analysts have been making recently. It is not rare to find an analyst remove a “Buy” rating from a stock after it drops 50% or more. They firm will also then lower its price target, but still leave it laughably high.
You would think Wall Street firms would me more cognizant of the calls they make. However, major brokers’ role in the markets isn’t much different from the mainstream financial media. The “breaking news-centric, what stock will perform the best this week” mentality runs rampant on the business networks worldwide. The strategy is simply to “make a call, make a market.” As long as shares are changing hands, they’re happy.
As investors, we need to pay close attention to analyst calls. Never count on a Goldman Sachs or JP Morgan analyst to get you out of trouble in time. These folks are notoriously late on updating their calls, and rarely take responsibility for their bad moves.
In contrast, we at Dividend.com remain undeterred, with our focus squarely on building long-term wealth through quality dividend-paying stocks. As the Federal Reserve continues to punish savers, investing in income-producing assets is one of the few options individual investors have to remain ahead of real-life inflation.
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A Look to Next Week and a Weekend Preview
Looking ahead to next week, earnings will not be much of a factor. The focus will likely be on the economic data as well as the latest Wall Street analyst calls.
Be sure to catch up with our latest watchlist updates this weekend on Dividend.com Premium, including reports on earnings/story stocks, analyst upgrades/downgrades, dividend ETFs, and much more. And as always, you can view our current recommendations on our industry-leading Best Dividend Stocks List.
Thanks for reading, and I’ll see you this weekend! P.S. Please pass this e-mail on to someone you think can use some financial motivation as well as being kept in the financial news loop that could affect them.