So, if you think the stock market is close to being fairly valued like I do, then the big question is: what does the future hold for your equity investments? From my perspective, the answer is very little, and that’s why dividends are so fundamentally important.
Dividends have been instrumental in providing returns greater than the rate of inflation since the bear market began 11 years ago. Just pull up a long-term chart on any of the major indices and you’ll see the enormous volatility and lack of trend in the stock market. If fact, looking at a chart of the S&P 500 Index, the volatility since the technology bubble burst in 2000 has been gut-wrenching. Perhaps these are ideal conditions for index traders, but for investors, it’s been a nightmare.
Because of this recent history in the stock market and the modest outlook for the future, I’m only really keen on big-cap companies that pay dividends. Owning the right basket of higher dividend paying stocks is the only way I would approach the stock market today. Investment risk is just too high to be betting a good portion of an equity portfolio on high flyers.
The stock market has eaten through a lot of sector trends over the last few years. Alternative energy stocks, specifically solar panel equipment makers, were very hot for a short period of time. Then the sector was decimated. After that, U.S.-listed Chinese stocks were big moneymakers, only to be annihilated as a group due to weak accounting standards. (See What You Can Learn From the Solar Energy Market Meltdown.) Finally, gold stocks were the cat’s meow; they generated solid capital gains on the stock market, but also corrected significantly.
The point of this analysis is that it’s been a very difficult environment for stock market speculators, pretty much for the entire last decade. Instead of trading the stock market for small capital gains, most investors would probably have been better off just investing in Union Pacific Corp. (NYSE/UNP), a boring railroad stock that’s up over fivefold (not including dividends) over the last decade—and it would have been easier to sleep at night with less work.
My stock market outlook reflects the times that we’re in and the difficult trading environment we’ve experienced in recent history. At the end of the day, I’ve learned over the years that … read more on :: http://www.profitconfidential.com/
- Author Articles
- More From This AuthorThe stock market is holding up well and it has performed strongly since the beginning of the year. I don’t want to rain on its parade, but I do want to mention that Street analysts have been quietly...Buying in the retail sector continues to be selective. Consumer spending continues to show some promise as evidenced by the retail sales reading in January that pointed to a 0.4% rise in total spending,...Copper prices, as well as all precious metals, have bounced strongly off the lows last year and there are many signs that this move up is only the beginning of the move that will push up mining...There are many reasons to be skeptical about this past January’s market rally. One of the most important key indicators flashing a warning sign is the fact that the stock market’s big rise in January...The bulls have been good to us so far in 2012. The stock market continues to show optimism; the key stock indices are displaying a “golden cross, with the 50-day moving average (MA) above the 200-day MA. ...
- Related Articles
- Related ArticlesNo matter how much you protect your personal belongings; there will always come a time that all your laid plans will fail. When this happens, you can lose a lot, including your cell phone, purse and credit...Posted Beverleigh H Piepe Almost everyone who has type 2 diabetes at one time was in a condition called pre-diabetes. Pre-diabetes is no in-between type 2 diabetes and are diagnosed with it time. This means...Buying a new home can be a harrowing experience for anyone, even if you have done it a thousand times before you always have to go through the same process. You have to take your time to find the right place,...Furniture assembly isn't as simple as most people think. In fact, it requires some thought and effort. Despite the fact that flat packs are becoming more and more simple in their assembly, they're still not...Do you need to find affordable SEO services, but had no luck so far? There are a few guidelines that will allow you to easily find the best services to their specific price range. These guidelines will ...
- Latest Articles
- Latest ArticlesHere is a quote from the source of Terez Owens, My uncle may be the contractor at the Q and it has been during the last Many years.If you have come to the conclusion that the relationship must end, both you...In recent times, there are various financial assistance available helping numerous people and businesses. Most of the people face different types of financial difficulties especially during purchasing the...Car windshields usually do not get attention from owners until something unfortunate happens to them. They comprise of two glasses that are separated by a thin layer of polyvinyl butyrate. Depending on the...The structure of your teeth and their appearance leave a huge impact on others about your looks. Many people are self-conscious of the condition of their teeth. You will lack self-confidence if you feel that...Dental problems can be really daunting for the victim as it does not affect you physically, but also mentally. Thus, getting rid of the dental problems at the earliest is more than necessary. Now, let us get...
