We had a bit of a weak start for the markets in what will be our first full week of trading in 2013.
Headlines regarding Bank of America’s (BAC) loan settlement with Fannie Mae had the stock up a touch early on, but those gains didn’t last as the stock finished unchanged by the close. The settlement dates back to questionable home loans sold to Fannie Mae by Countrywide Financial. As you can see by the rebound in BAC’s stock price (nearly doubled in the last twelve months), all is quickly forgotten and Wall Street has forgiven the company’s sins. Does it make it right? No, but that’s the game sometimes.
With the averages lower for much of the day, Wall Street analyst downgrades worked to push stocks like Lowe’s (LOW), Bank of New York (BK), Valero Energy (VLO), V.F. Corporation (VFC), and Phillips 66 (PSX) lower. Apple (AAPL) ended down following an analyst trimming the company’s price target.
The Death of Dividends (Hardly)
How quickly the panic from the business media has shifted! For most of the fourth quarter of 2012, up until the Fiscal Cliff resolution, many in the business media were penning gloom and doom pieces on investing, capital gains, as well as dividend taxes making income investing a fruitless plan. Despite all the predictions for this disaster, all those headlines are now history.
For investors that could not handle the stress caused by the headline-pounding “dividend investing is dead” stuff, and who got out of the markets, it is time for a reality check. You must overcome the mistake of chasing media pundits’ scare tactics and eyeball-chasing market takes out of your brain and get back to finding quality income-producing companies that can give you the income required to build a nice nest egg for years to come.
Now please don’t take my previous paragraph as a “buy anything” or “jump all in” call on our part. On the contrary, I just want you to remember the lesson that getting scared out of the markets completely is almost never a good idea. Those scary headlines will be back one way or another, so the quicker you understand the game, the smarter your investment decisions will be over time.
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