Wall Street finally hit a rough patch in the new year, with the markets seeing several lackluster trading sessions this week. News from Apple (AAPL), Dell (DELL), and Heinz (HNZ) was not able to overcome hit-or-miss earnings results and disappointing economic concerns from keeping many investors on the sidelines.
Meanwhile, alarming data from the European Union and Japan was released this week, with both markets experiencing a worse-than-expected decline in GDP growth. Austerity measures in various European countries have not resulted in the economic recovery that foreign policymakers had hoped; many analysts actually attribute the ongoing economic troubles to the sharp cuts in social spending. Regardless, as European, Japanese, and other foreign markets continue to struggle, it is safe to say that this will drag down the US economy as well.
Speaking of the home front, the Constitutionally mandated State of the Union address was held Tuesday evening. After years of political gridlock, it is hard to come away with much optimism from President Obama’s speech. This new normal is especially worrisome considering Washington is facing another self-made fiscal crisis on March 1, with the across the board spending cuts known as sequestration set to take place. If our policymakers do not get their act together, their actions (or inaction) will be sure to impact the wallets of consumers and investor alike.
As US investors prepare for the three day President’s Day weekend, we look back at the week that was on Wall Street with seven articles circulating the business, finance, and economic space this week:
1. Why Apple Should Ignore its Shareholders
Apple (AAPL) has spent a lot of time in the news this week, with the recent lawsuit from David Einhorn drawing attention to the company’s huge stockpile of cash. Though some investors, analysts, and pundits have called for Apple to listen to shareholder demands, Felix Salmon of Reuters goes on to state that Apple should continue its path of ignoring shareholders and focus on making its innovative products.
2. What to Do When the Market Crashes
at Oblivious Investor
The markets have experienced a huge run up over the past four years, with the indices hitting near all-time highs. Many have wondered if a stock market bubble is emerging once again. In the event the bubble were to pop and we experience some sort of market crash, Mike Piper at Oblivious Investor outlines a few possibilities for investors to consider to weather the downturn.
3. Dividends and Stock Prices: Welcome Back to the Cutting Edge
at Political Calculations
In a technical and thorough article, the analysts at Political Calculations use extensive data to diagram the effect dividend payouts have on overall stock prices.
4. Concerned by Recent Economic Data? Look Closer…
at Advisor Perspectives
Despite recent news regarding a decline in GDP growth in the US, Marco Pirondini outlines why the data may be misleading and there shouldn’t be any alarming concern. Having said that, Pirondini acknowledges the few macroeconomic worries, especially in Europe, that could negatively drive down the economy.
5. Why Investors Need to Understand “Total Yield”
at The Reformed Broker
Investment advisor Josh Brown highlights an investing metric that calculates the returns from both dividends and share buybacks called “total yield.” He argues that investors need to understand and appreciate the full returns from both dividends and share buybacks rather than get caught up determining which one is better.
6. Let’s Stop Calling Countries “Markets”
at Naked Capitalism
Too often investors, economists, and corporations think of countries in terms of “markets” rather than recognizing they are a collection of people. Yves Smith gives an insightful commentary on this trap that many fall into when overly concerned with investment and growth.
7. The Research Case for a Higher Minimum Wage
In President Obama’s State of the Union address on Tuesday, he made a plea for Congress to raise the federal minimum wage to $9 per hour. In the wake of this request, shares of McDonald’s (MCD) and some other fast food and retail companies saw a dip in price. Matt Yglesias at Slate makes the case why a higher minimum wage won’t dramatically hurt companies or the economy, and thus investors’ holdings.
Interested in ETF investing? Check out 7 Articles ETF Investors Must Read: 2/14
Follow me on Twitter @MTFlannelly
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