A good portion of the market was able to buck the huge drop in Apple (AAPL) shares today on the back of the tech giant’s disappointing earnings guidance. Several months ago, such an overall market move would have been thought impossible following any bad news out of Apple.
Looking at some of the earnings winners taking flight, we saw stocks like Bristol-Myers Squibb (BMY), Western Digital (WDC), Agrium (AGU), and W.W. Grainger (GWW) moving higher. On the flip side, joining Apple in trading lower following earnings were names like McCormick & Co. (MKC), Altera Corp (ALTR), Lockheed Martin (LMT), and Raytheon (RTN). Nokia (NOK) finished down 8% on the company’s results, but also on news the company has suspended its dividend. Finally, Wall Street analyst upgrades helped lift stocks like Ross Stores (ROST) and United Parcel Service (UPS).
The Media Feels No Pain
For everyone that has been burned buying Apple as it was hitting new highs just six months ago, and riding the euphoria caused by the huge attention it was given by financial media outlets, know this: the media is not feeling your pain. They’ll discuss the huge drop, sure. But at the same time they will just move on to the next hot name that is spiking. This is the financial media in a nutshell, in case you haven’t been in the markets for very long. I learned that lesson early on in my former life as a trader. I started out paying very close attention to what the “experts” on TV had to say. Soon enough, I figured out that the concept of accountability was essentially non-existent for the pundits making appearances each day. It would burn me up to see guru after guru change their stripes at every little turn the markets would make. Soon enough, I learned that if I was going to attempt to trade the markets, I needed to develop my own systems.
If you have the desire to be an active trader (remember the odds of success are extremely low), be prepared to develop your own signals. Also bear in mind that those financial media outlets you can’t live without are not sharing the hurt with those who get burned buying the euphoric flavors of the day. At the end of the day, it really is up to you to decide what to buy and sell, regardless of how influential any pundit may be.
I’ll say it time and time again: trading is hard. It’s among the most stressful careers in the world. That’s why I much prefer investors stick to building portfolios that deliver consistent returns, with focus on quality dividend-paying stocks. Unlike the flavor-of-the-day momentum names, high-yield dividend plays put the power of compound interest to work for you over time. Building wealth is a long-term game, so why not invest for the long term?
One thing is for certain when it comes to Wall Street: trading lessons learned are often very costly. Don’t let your capital be a part of that expensive equation.
Thanks for reading, and I’ll see you tomorrow!
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