In having the watched the markets for nearly two decades and being a fan of the Wall Street history, it’s amazing to see how things can change for the Wall Street faithful (analysts and investors) over the course of time.
It’s a classic case of “you’re in one day and out the next.” Companies are given plenty of Wall Street love when things seem to be going well. Once a bit of turbulence hits, however, analysts turn up the hot lights on management (or so you’d hope) and then doubt begins to build. Investors soon follow with their “all hope is lost” sentiment. Where this perspective hurts investors most is when the window of concern is based on a narrow set of events. For example, insider selling is a normal exercise for companies. When the market is in a short-term downturn, insider selling can set off triggers for some investors. Is some cases, the worry is warranted, but in most cases, it is normal business practice. Now here’s the thing: if the market is in rally mode, no one bats an eyelash.
Keep these thoughts in mind as you analyze investment opportunities. This process is even more important for anyone considering being more of an active investor. Look at the change in tone with how investors are viewing Apple (AAPL) these days. Sure the company has disappointed investors for the last few quarters, but it was just six months ago when the stock was hitting $700 a share and many analysts were putting $1,000 6-month price targets on the stock. Now AAPL is under $450 and predictions have come down quite a bit.
For a while there, it was “no Steve Jobs, no problem.” Fast forward to today and that is no longer the sentiment. Many are now questioning the company’s lack of innovation (where’s the new products?), not realizing tech is often more cyclical than one would think. This is certainly not about defending Apple and its recent weakness, but just to highlight how Wall Street and investor love can be quite fleeting. Sentiment will always be changing in the markets, especially when the focus is on shorter-term price movements (less than a year).
The focus on Wall Street and in the business media is almost always on the flavor-of-the-day. Long-term investors need to shun this manic approach entirely. To build wealth with the help of the markets, the formula is incredibly simple: consistently put money to work in high-quality income-producing dividend stocks.
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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!
Thank you for sharing part of your weekend with me, and please be sure to pass this post on to anyone you think we can get inspired and educated about money, building wealth, and using common sense to do so.
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