Yes, speculators are getting slaughtered right now as they should be. Benjamin Graham refers to speculators as a large casino that plays only on luck, not skill. This is what day trading has become, a bleep across a screen; never mind the intentions of the stock itself or the company that issued it.
In times that are rough, I remember one key element of liquidation; when a company goes under, the common stock is the last to be liquidated. That to me means the common stock is the most risky of all investment types. Day traders would disagree, but I am sure that there are very few who have beaten the S& P this year and if they claim to have, it is just words on a chat board on Yahoo!.
CNBC this morning seemed to go over numerous ways to hide from the big expected drop, yet if you have your money in the right place there is no need to worry. I go under the premise or investment strategy that any stock with a dividend and upside potential is the true winner. Here, you dividends cover any loss and the upside can typically payout the 20 to 30 percent needed each year. If the stock goes up from purchase, then you will make an extra payout.
As the market shifts back and forth, many are finding it increasingly hard to make money. I tend to think that many stocks without any sort of dividend are extremely speculative as you do not know whether or not you will actually pull some sort of profit. It is easy to be sucked in to the wrath of the masses, CNBC being the spokesperson, as this is what the big boys want you to do. They start rumors, talk of large gains, yet in the end, this is a slaughter house technique that is used over and over again where the rich stay rich and the poor individual investor is “sold out” of their position every time prevails.
It is my position that there is an easier, softer way to investing and it can still be as or more lucrative than day trading. What I like to see in a stock are two things: 1) Room for 10% growth or more per year on a five year period and a some sort of dividend that is either paid quarterly or bi-yearly.
I am sure this will get slammed by the masses of day traders they believe that they are ahead of the game and that is fine. What they do not know is this; by the time they get their bit of information, the large firms or big boys as I call them have already had their position in for months. This allows them to sell off to the ignorant day trader on a way or two day hike. This creates a loss every single time. So versus gambling away your life savings, perhaps you should play some dividends.
The strategy is simple. Hold the stock until it hits its target, which could take sometime, then sell and move onto another undervalued stock with dividends. This strategy seems too simple and indeed it is. But it is the only way to make money consistently, Bull or Bear Market.
Here is a list of few stocks that I think can do this for you.
MO: Altria Group. This stock is trading almost at it lows ($20.60) and should be trading at $27.50 to $28.00. Altria also provides a great dividend of $1.16 per share, per year. That is 5.60%.
BMY: Bristol-Meyers, Squibb. This stock is much like MO; It is trading at it lows ($19.60) and should be trading around $26.50 to $27.00.There is also the matter of a 6.26% dividend. That equates to a 1.24 per share each year.
- RGC: Regal Entertainment Group. This stock, again, is at it year end low ($15.78) and should be trading at $27.00. I believe there is a ton of room for growth and we will see it this summer. The dividend is also handsome as well. Regal pays a 7.60% Dividend yield which equates to $1.20 per share annually.
