Morning Dow Report: Does a Down January Mean Trouble for 2014?

As losses accelerate, the Dow has investors worrying about the future. Will January declines turn into a market rout? Find out more here.

Jan 31, 2014 at 11:00AM

The Dow Jones Industrials (DJINDICES:^DJI) are closing out January just as the month began: with a triple-digit loss. This morning, stocks dropped on concerns on multiple fronts, with the Dow falling 170 points as of 11 a.m. EST. An earnings warning from retail juggernaut Wal-Mart (NYSE:WMT) and ill-received results from energy giant Chevron (NYSE:CVX) must take some of the blame. On the economic front, a third-straight monthly drop in the Chicago Purchasing Managers' Index pointed to choppiness in the U.S. economy, and a key reading of consumer sentiment dropped in January from the previous month's levels. At the same time, ongoing stresses in emerging-market economies could lead to further central bank action to stem the threat of trouble spreading into other countries. With the Dow slated to post a huge loss for January, many wonder if the stock market is doomed to poor performance in 2014.

At current levels, the Dow has lost almost 900 points this month, and unless the average recovers later today, investors will finally have the 5% blue-chip index correction that many have been anticipating. With so much volatility in the market lately, it's easy for investors to conclude that the time is ripe to get out of stocks with the lion's share of their gains over the past five years.

But when you look at individual stocks within the Dow, you get two different pictures of the market. On one hand, Chevron is driving today's losses, with a 32% drop in earnings coming from lower oil prices and falling production both domestically and worldwide. Coming on the heels of rival ExxonMobil's (NYSE:XOM) earnings report yesterday, the challenges that huge oil companies are having in maintaining production levels as energy prices fall could continue to impact the market throughout the year. So far, those concerns really haven't spread to most of the smaller energy companies that have driven the U.S. boom in energy production, but the entire industry is sensitive to changing market conditions for crude oil and natural gas products.

On the other hand, one surprising winner today is Caterpillar (NYSE:CAT), which is up almost 1%. The heavy-equipment maker has suffered from poor economic prospects for China and other key markets for a long time, but shareholders are increasingly optimistic that the worst could be over for the company. Optimism about Caterpillar points to the potential for the entire stock market to rebound even if January's mini-correction turns into more extensive losses in future months, as long as a market decline doesn't reverse the macroeconomic progress that the U.S. has seen since the 2008 recession ended.

Investors shouldn't conclude that the Dow will have a down 2014 just because of January's results. But they should also be prepared for what would be a natural loss for stocks after five consecutive years of gains. By preparing for all eventualities, investors can position themselves to take maximum advantage of whatever conditions they face in 2014.

Pick one winner for 2014
Even if the market does badly in 2014, some stocks will still post big gains. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information