7:30am Don't be surprised to see a rally in the morning no matter what the jobs number is. I think the rally will fade in the afternoon because no one wants to be long going into the weekend.
The hedged option trade I made in Urban Outfitters (URBN) hasn't panned out the way I expected it to. I will continue to hang on for a little while because I think there is a chance for the puts to bring enough value to make it at least a profitable trade. It certainly won't be nearly as profitable as I expected. I usually look to make at least 30% in a trade like this. I will be happy with 10% at this point. I think it can get there.
I also added to my Diamonds (DIA) position yesterday. My average price is now a little over $70. I am not calling a bottom here but I think the Dow can rally very hard in a short time. If we can start feeling a bottom in the economy, the short covering can be dramatic. For the Dow to go dramatically lower, we would need to see the likes of Wal Mart (WMT) IBM (IBM) and McDonalds (MCD) go lower. I simply can't see how that would happen.
One REALLY troubling trend is companies cutting their dividends. Wells Fargo (WFC) did it today. What is more troubling is the market reaction to companies cutting their dividends. The market sends these stocks higher short term when they are slashing the overall, long-term return for investors. Remember, 40% of the overall return of the S&P 500 over the last 100 years has been dividends. When you are taking that away, you are hurting the long term returns for investors. If this market is ever going to recover, dividends have to be there to attract investors.
Not everyone has the time, inclination, or ability to be a trader. They look to stocks for investments. If you take away 40% of their attractiveness, you hurt the long term value they present. Be careful of the dividend cutters and until next time, stay low risk..
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Chris, any strong dividend payers out there? I love the cash flow from em. Any actual return is good in this market. Thanks
Thanks for the question. If I had to buy something for a dividend to hold forever, I would be looking for stocks that have recently raised their dividend. WMT comes to mind off the top of my head. Any stock that has raised their dividend since the beginning of the year should be safe. I also like the flexible dividend strategy that NUE uses. Check them out too..
With the didvidend cuts I think that this is a traders market now more than ever. The days of be longing a stock is over. I heard a senator talk about a trade tax and in my opinion he is only capable of creating income through tax and not skill. This tax would be a percentage so a 8 dollar trade would become a 200 dollar trade. His thought processes to keep people from trading. I think hell why not just do away with private capitalism completely. Eventually the govt. will own the dow and maybe Mr.Gibbs will then push his concerns a little more in the dirrection it should be. A bubble is created a bubble is popped, a depression begins. The Govt. gets involved and wipes out share holders. After Fannie and Freddie and AIG and so on and on, where does the future really point. In my opinion, trade,trade, and trade take profits because these CEO's certainly do. They take profits when they don't deserve to. Example: If a hairstylist screws up every hair cut she or he does all year and then took their full pay with a bonus we would be investing in a lot of hats. So I feel that a hedge fund manager looses 4 or 5 percent and that is good and he still takes his million dollar bonus paid from TARP is the same thing. I was with a "wealth capital management company" and when 60% of my money was lost I was told "I can't predict the market" well then why does anyone need to have a higher education to manage other peoples money; because unlike hair money dose not grow back and hats won't cover up the loss. I think the financial sector has to stabalize in order for this to volitility to end. I believe that the stock market was created from 12 components and was designed to elevate the intresets in all who were invested,the company,the workers,and the investor. Now there is an abundance of components, sectors, different markets, and the only ones who benifit our the traders, which in my opinion defeats the entire purpose of investing. I will now put the third and finally topic in this post,religion, PRAY!
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