Oil and Foreign Exchange Rates Impact Earnings
Posted on January 30, 2015 | Dividend Investing
It was a busy week for the DI portfolio, with 13 of our companies reporting. Due to the large inflow of earnings announcements, we want to keep the commentary short and sweet. We’ve seen recurring themes thus far not only in the DI portfolio but among several large companies that have reported quarterly earnings so far: the impact of a stronger dollar and lower oil prices.
Potential Upside (and Downside) to the ECB’s Bond Purchases
Posted on January 23, 2015 | Dividend Investing
It will be a while before we know what the impact of the European Central Bank’s (ECB) bond purchase program will be. Yesterday, as you’ve probably heard, the ECB announced its intention to purchase 60 billion euros of bonds per month between March 2015 and September 2016.
The immediate impact was a decline in the value of the euro against the dollar. This is a good thing for Americans with near-term plans to travel to Europe. It’s not good for American companies conducting business across the Atlantic. A stronger dollar makes U.S. products more expensive and reduces profits translated from euros into dollars. (The actual reduction from currency translation depends, in part, on the type of hedging employed.)
Getting More Energy, Plus the January Monthly Report
Posted on January 9, 2015 | Dividend Investing
The calendar may have flipped over to a new year, but one of the major stories in the financial arena remains unchanged: oil. Crude prices continue to slide, breaking below $50 per barrel. Reuters reported that prices on both West Texas Intermediate and Brent Sea oil fell today to levels not seen since 2009.
Take Advantage of Not Being a Professional Money Manager
Posted on December 30, 2014 | Dividend Investing
Money managers will be eyeing their year-end return numbers closely because managers are judged on performance. As an individual investor, you have the advantage of not having to report your performance. This is a huge advantage because it means never having to make short-term trading decisions in hopes of boosting your performance figures or making your portfolio look more attractive to clients. Rather, the only performance number that matters for you is whether you have enough money to fulfill your financial goals. You get the luxury of focusing on the long term, while money managers have to worry about keeping clients and their jobs every quarter. We can’t emphasize enough how big of an advantage this is for you.
Muddled Monetary Policy Averts a Pullback in Stock Prices
Posted on December 19, 2014 | Dividend Investing
Speaking of the holidays, perhaps we should write about the possibility of Mr. Market being placed on Santa’s “nice” list more often, as we did last week. After being right on the cusp of the second pullback in three months, the S&P 500 index bounced back strongly in reaction to the Federal Open Market Committee’s (FOMC) meeting statement and Fed chair Janet Yellen’s subsequent press conference. The S&P 500 had been down 4.9% from its December 5, 2014, close of 2,075 on Tuesday evening before rising on Wednesday. (Pullbacks are defined as a decline of greater than 5%.)
December Monthly Report, and Where Is the Santa Claus Rally?
Posted on December 12, 2014 | Dividend Investing
The December monthly report is now online. No transactions were made this month, following the changes we made in October and November. A few energy stocks crossed our radar screen, but none that we were ready to add to the DI portfolio this month.
In the December report, we discuss whether stock buybacks are good or bad for shareholders. There has been a debate within the media about the pros and cons of share repurchase programs. Since buybacks compete with dividends for corporate cash, we wanted to share the points made by both sides with you.
Our Stance on Owning Oil-Related Stocks
Posted on December 5, 2014 | Dividend Investing
While we were off for the holidays, oil-related stocks experienced a sizable drop.
When Will Apple Be Worth $1 Trillion?
Posted on November 21, 2014 | Dividend Investing
Hedge fund executive Steve Einhorn predicted that DI holding Apple Inc. (AAPL) will command a market capitalization of $1 trillion. Einhorn, of Omega Advisors, made the prediction at the Reuters Global Investment Outlook Summit on Monday. He did not give a timeline, however, only saying the stock could “eventually” get there.
New Portfolio Changes and the November Monthly Report
Posted on November 7, 2014 | Dividend Investing
More details about the Dividend Investing portfolio changes, including our rationale for the moves, are given in the November monthly report, which is now on the Dividend Investing website.
Waving Goodbye to Quantitative Easing in the U.S.
Posted on October 31, 2014 | Dividend Investing
The Federal Open Market Committee voted to end its asset purchase program, or QE3 (quantitative easing 3) as the financial industry folks like to call it. It’s not the full end to monetary stimulus, however. The Federal Reserve will continue to reinvest principal payments, meaning the early repayment of bonds it currently holds. Interest rates will be kept at rock-bottom low levels too.