Stocks can't buy friends these days. Last week Dow dropped almost 500 points bringing the YTD total to 1400. This last week was especially significant for 2 reasons. First it's after whopper sized gov spending bills were announced & approved. The sad performance of the Dow shows they got a thumbs down rating by the markets. Secondly, 8K now has switched from being a floor to a ceiling & looking a bit distant presently. A new floor for the Dow has yet to be determined while it's selling at 12 year lows.
Even the very strong MLPs got dragged down last week, shown in the first graph. The upper line shows how well MLPs have done this year, but that came to an end last week. Perhaps they're being viewed as just another high yield security (double digit yields are common) which deserve more selling. The second graph shows how the Dow compares with REITs. They've been on defense all year, dropping more than the Dow. REITs have already been suffering from fears about future div cuts. Junk bond funds had been coming off a modest rally after being greatly oversold last year, but they have been caught up in heavy selling in the last few weeks.
Dow vs Alerian MLP Index - YTD
Dow Jones vs Dow REIT Index - YTD
Divs remain a key consideration when selecting investments, however, more than ever, investors have to be aware of the constant danger of div cuts. 3 Dividend Aristocrats have already cut their divs this year. General Electric (GE), the only Dow stock from the original group 100+ years ago, has a mere 9 handle with a 13+% yield. They look to be next with a div cut despite reassurances by their CEO. However strong companies persevere. Coca Cola (KO), another Dividend Aristocrat, increased their div last week, bringing their streak of consecutive higher annual divs to 47.
Maybe somebody from Blogger will read this. It's been giving me (& others in the Blogger community) a tough time of posting. This problem seems to be linked to switching to the "new" Blogger last week. Even though Blogger is making life tough, I'm struggling & managing to create posts. I will fight hard to keep posting even though Blogger provides no help!
Ugly talk about nationalizing banks on Fri added even more concern to already overly nervous markets. Given that kind of loose talk thrown around in DC, next week may be another ugly week for the markets.
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