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| 2010-03-10 02:00 |
BONDS OVERSHADOW STOCKS
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It has been one of those days where the market wanted to breakout but never got the news that could have provided a spark. In fact,
equities took a backseat to bonds both domestically and abroad.
* U.S. 10-year Treasury auction of $21.0 billion
* Portugal raised $1.34
billion as investors bid for $2.15 billion April 2021 @4.17%
* Citigroup $2.0 billion 8.5% 30-year TruPS
* Novartis raised $5.0 billion
*
MGM raised $845.0 million through a 10-year bond issuance
A pullback in foreign demand actually knocked the so-so equity rally off the rails.
Additional News Items
Wholesale trade saw sales continue to edge higher while inventories continue to decrease.
There was much greater petroleum demand than anticipated as
crude inventories climbed less than expected while gasoline and distillates experienced greater draw downs.
Does it Make Sense to be Mechanistic in One's Investment
Style?
By: Brian Sozzi, Research Analyst
I think over a long period of time, the "Dogs of the Dow" or other mechanistic
investment approaches becomes a crowded trade. By noting this I mean the more investors get into such stocks in the search for yield, the price of the
stock should theoretically go higher, thus reducing the yield. With yield declining, it reduces the attractiveness, or the very point of, the "Dogs of
the Dow" or other mechanistic investment approaches. I would think that perhaps those Dogs have less of a propensity to raise dividends given that
their operations are not as healthy as others in the Dow, helping to explain their higher yield from the onset. I suppose there is a law of
diminishing returns at play with regards to mechanistic approaches to investing.
I would rather put money to work in those companies that are
demonstrating a strong probability for a dividend reinstatement or dividend increase. It would be these companies that are likely to experience
stronger equity prices given their stronger earnings power By extension, that free cash flow could be plowed (or reinvested) back into new growth
assets (in retail, it would be new stores or technology to drive efficiencies from existing stores and distribution) or returned to shareholders.
Again, investors here would enjoy share price appreciation in the early years of high growth in earnings followed by the arrival of dividends as the
business matures and growth slows.
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Disclaimer: Securities Operations Forum is providing this research to assist investors in determining when to buy and when to sell. All investment decisions are yours and as a result you could make or lose money. Securities Operations Forum, its employees and/or its affiliates and family members may from time to time take positions in the open market or otherwise with respect to the securities discussed, but not have stock ownership equal to or greater than 1% of the outstanding stock of the covered company nor does any employee of Securities Operations Forum sit on the Board of Directors of any covered company. The statements made herein include information obtained from sources believed to be reliable, but no independent verification has been made and we do not guarantee its accuracy or completeness. The statements made herein contain general information and do not constitute an offer to buy or sell any security. |
