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U.S. Dividend Watch List: March 29, 2013
Below are the 16 companies on our U.S. Dividend Watch List that are within 11% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.
Considering the Downside Risk to our U.S. Dividend Watch List Stocks
In our last review of our Watch List stocks, we tried to see if “sell in May” had any merit. Our conclusion was that within a rising market, in spite of short-term declines, the U.S. Dividend Watch List (USDWL) of stocks provided reasonable performance over a one-year period. It is our firm belief that a rising stock market makes everyone seem “smart,” so it is necessary for us to examine the performance of U.S. Dividend Watch List (USDWL) stocks during a stock market decline. Will stocks that are already beaten down underperform the Dow Jones Industrials Average?
End of March Dividend Watch List Performance
Below is the one year performance of our March Dividend Watch Lists for 2010, 2011 and 2012. While the Wall Street adage says “Sell in May and Go Away,” we’d like to know what the market would look like if bought one month before May and held for the following year.
First up is the March 26, 2010 watch list (found here). The chart is organized based on the stocks nearest the new low are on the left. For the year, our top five stocks (XOM, FPL, MON, TMP, BRO) gained an average of +20.86% as compared to the Dow Jones Industrial Average gains of +12.63%. In this example, the top five stocks provided above average gains. Within the context of the gains that were made one year later, the Dow Jones Industrial Average experienced a decline of –14.60% from the April 2010 high to the July 2010 low. As a note, FPL bought PGN and trades under a new symbol NEE.
Next up is the 2011 watch list (found here). The chart is organized based on the stocks nearest the new low on the left. For the year, our top five stocks (SJW, SYY, WABC, PPL, TGT) gained an average of +8% as compared to the Dow Jones Industrial Average gains of +7.04%. In this example, the top five stocks provided moderate gains. Within the context of the gains that were made one year later, the Dow Jones Industrial Average experienced a decline of –19.19% from the May 2011 high to the October 2011 low. As a note, HGIC and TRH were both acquired.
The last Dividend Watch list is from March 23, 2012 (found here). The chart is organized based on the stocks nearest the new low on the left. For the year, our top five stocks (TR, CHRW, CLX, ATO, CWT) gained an average of +18.32% as compared to the Dow Jones Industrial Average gains of +10.94%. In this example, the top five stocks provided exceptional gains. Within the context of the gains that were made one year later, the Dow Jones Industrial Average experienced a decline of –10.70% from the May 2012 high to the June 2012 low. Additionally, the Dow Jones Industrial Average declined –8.71% from October 2012 to mid-November 2012.
Even with the view of “Sell in May and Go Away,” the top five stocks on our U.S. Dividend Watch List have performed quite well. The average gain over the three periods reviewed was +15.72% compared to average gain of the Dow Industrials at +10.20%.
All good things must come to an end. We do not expect that the stock market will be as forgiving in the next three years as it has in the last three years. However, we recommend considering the top five stocks from our latest dividend watch list for potential investment, even if the mantra is “Sell in May.”
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Posted in Dividend Watch List, Performance Review
Coppock Curve: March 2013
The Coppock Curve is one of the technical indicators that we focus on for long-term buy signals for the stock market. The Coppock Curve is only useful as a BUY indicator when the chart goes from positive territory to the negative territory and then starts to turn decidedly upwards. As previously indicated, the Coppock Curve does not provide SELL signals in any way.
Insurance Watch List: March 27, 2013
The following is one of our personal favorite watch lists. We started tracking the insurance industry in January 2011 and we’re very impressed with the results so far.
Anyone who wishes to be successful in insurance stocks should read the book The Davis Dynasty by John Rothchild. The book starts with Shelby Collum Davis investing approximately $50,000 to $100,000 that ultimately grew to $900 million after 47 years. The strategies employed by Davis seem highly accessible to average investors.
Gold Stock Indicator
On March 2, 2013, we pointed out the fact that, based on our Gold Stock indicator, there was a pattern of initial panic declines that were followed by secondary panic declines (found here). We said the following:
FTSE 100 Watch List: March 22, 2013
Below is a list of the Financial Times Stock Exchange 100 (FTSE 100) companies that are within 10% of the one year low based on what we believe to be reliable sources.
U.S. Dividend Watch List: March 22, 2013
Below are the 18 companies on our U.S. Dividend Watch List that are within 11% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.
Posted in NLO Dividend Watch List
Canadian Dividend Watch List: March 20, 2013
This is a list of Canadian dividend stocks that currently, or in the past, had a history of consecutive dividend increases. For those wishing to find the most complete fundamental information on these companies, we recommend visiting one of Canada’s leading financial websites, the Financial Post (found here). However, Yahoo!Finance probably has the better long-term charts and historical dividend data.
Nasdaq 100 Watch List: March 19, 2013
Below are the Nasdaq 100 companies that are within 10% of their respective 52-week lows. Stocks that appear on our watch lists are not recommendations to buy. Instead, they are the starting point for doing your research and determining the best company to buy. Ideally, a stock that is purchased from this list is done after a considerable decline in the price and rigorous due diligence.
‘Wash Trades’ Scrutinized. Why Now?
According to a March 18, 2013 Wall Street Journal article titled “'Wash Trades' Scrutinized; Issue Is Whether High-Speed Firms Illegally Buy, Sell Futures in Same Deals,” “U.S. regulators are investigating whether high-frequency traders are routinely distorting stock and futures markets by illegally acting as buyer and seller in the same transactions, according to people familiar with the probes.” (found here)
We’re not sure what really prompted this action, however, the New Low Observer has been tracking these issue for a very long time (since 2008). In an August 2009 article titled "After Hour Conundrum" (found here), we said the following:
"My suspicion is that institution(s) are accumulating short/long positions as the price of the stock rises during the regular hours. Once the market closes, the same institution sell/buy the shares to/from themselves or a related party. Additionally, options for the stock could have been purchased, sold or written in anticipation of the expected change in price after-hours."
An activity that has been going on since 2008 and was easily identifiable begs the question, Why now? We’ve become inured to the claims that regulators are going to take action on issues that are deemed illegal, especially when said illegal activity is so widespread.
We have extensive records of wash trades from 2008 to the present. The playground for such illegal activity is in the pre-market and after hour markets. Our February 2013 article titled “Investors Pay Big for Loss Protection” (found here) said the following:
“At some point, there will be a mass of pre/post market participants that will cause a stampede for the narrowest exits on a much broader scale that will put into the question whether what remains of the current system actually works.”
In the past, we’ve asked that regulators address this fraudulent activity before it is too late. However, when regulators actually start to get involved it usually too late. Let’s see how this plays out.
Note: A partial depository of after hour shenanigans is highlighted in the link below:
Posted in After Hours, pre-market, scheme