Market Wrap-Up for Aug.8 (DIS, M, RL, HPQ, MCD, more)
By: Dividend Daily
Posted on August 08, 2012 at 16:17 PM EDT
Some of the recent late-day selling may have gotten a few investors nervous to get too long into today’s action, and as the result, the markets meandered for much of the session. We did have some big-name earnings plays capturing investors’ attention. On the upside, Walt Disney (DIS), Macy’s (M), and Computer Sciences (CSC) all [...]
Some of the recent late-day selling may have gotten a few investors nervous to get too long into today’s action, and as the result, the markets meandered for much of the session.
We did have some big-name earnings plays capturing investors’ attention. On the upside, Walt Disney (DIS), Macy’s (M), and Computer Sciences (CSC) all posted gains on their reports. Meanwhile, Ralph Lauren (RL) closed down on their results, while shares of fast-food giant McDonald’s (MCD) sold off following the company’s July sales update.
Hewlett-Packard (HPQ) surprisingly came out with some upside guidance for this next quarter, but the shares could only manage a 2% gain, or $.45 on the news. Many a “value” player has taken a stab at catching the bottom in HPQ, but the proverbial bottom has remained elusive. Finally, shares of online travel giant Priceline (PCLN) are down $108, or -16%, on earnings news that momentum traders couldn’t sell fast enough on. If you remember, the same thing happened to Chipotle (CMG) a while back, and the long traders took a triple digit hit there as well. We know the business media makes it look sexy to want own momentum plays, but all too often, retail investors get caught buying the tail end of the euphoria or earnings peak. Trading is a tough game, and has only gotten harder the last few years.Historic and Quite Negative Shift Begins for Social Security System
According to a study by the Associated Press, individuals retiring today will be part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire. Part of the findings included a 2011 study by the Urban Institute, highlighting the fact that a married couple retiring last year, which earned average lifetime wages, paid about $598,000 in Social Security taxes during their careers. This couple can expect to collect about $556,000 in benefits, but that total is dependent on the man living to 82 and the woman living to 85.
The number of recipients collecting social security currently is around 56 million, but that number is expected to grow to 91 million by 2035. Needless to say, those retiring in the next few decades can expect to get a lower percentage back of what one would have paid in. If the recent trend continues, it’s even possible that today’s youth may never collect any Social Security benefits, despite paying hundreds of thousands into the system themselves.
Judging from this latest data, all we can continue to say is that investors need to remain proactive in seeking out assets that can produce income to make up for any potential financial shortfalls that can come our way as we get older. As the cost of everyday items we need to shell out money for continues to rise precipitously (food, gas, any type of taxes associated with income or property, etc.), this fact is all the more important. The current ultra-low interest rate environment is certainly propping up commodity prices, and those costs are being passed along to many ,of us. We know the banks are able to make their numbers as long as rates stay low (we hope anyway, as the banking business is not as attractive as once was), but for savers and those who prefer to avoid risk, that luxury can no longer be afforded. Stay in cash and lose out to inflation. Park your money in a savings account, money market, or CD, and get paid nearly nothing to do so.
Clearly, we all need to work harder and longer than ever — and invest our money much more wisely — if we’re going to stay ahead of the retirement game.Where is the Big Money Parking Cash?
I just read bout Google (GOOG) (which is sitting on $40 billion in cash) recently investing hundreds of millions of dollars into asset-backed securities, tied largely to automobile loans and consumer credit-card payments. According to recent data from the Wall Street Journal, the auto portion of an ABS index compiled by Barclays has returned 2.34% this year on deals with an average maturity of just over two years. That compares with 0.30% for comparable Treasurys this year. So you see, low interest rates are causing all sorts of trouble for companies sitting on cash hoards, big or small.
The conclusion for investors as we see it is to remain super-selective, but at the same time, realize that doing nothing is not a long-term solution. There is a point to where chasing yield can eventually get you hurt. We are diligently analyzing that very topic every day as we consider new high-quality dividend stock recommendations.An Important Note Regarding the Best Dividend Stocks List
We want to make sure everyone understands that the stocks on our Best Dividend Stocks List are the names we currently like for new investor capital, regardless of what date the stock was first recommended on. If and when a stock is removed from the list, we will clearly state whether the stock should be sold (which is rare but occasionally will happen), or simply held in one’s account until we see a better entry point or catalyst.
And here’s one last thing to remember about what we do here at Dividend.com: it’s not just the names that we recommend that can help you build wealth, but also the things we try to steer you away from that are just as important. Forget about speculative or penny stocks, chasing unprofitable IPOs, and listening to the manic talking heads in the business media!Our Beat The Markets with Dividend Stocks eBook Has Arrived!
We just debuted our brand new 275-page eBook, exclusively on Dividend.com! In this digital-only book, we look ahead to 2012 and the main factors that could affect dividend investors. A $39.95 value, the eBook is a free download for paid Dividend.com Premium subscribers.
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Thanks for reading everybody. I’ll see you tomorrow!
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