Dow Tonight: 3 Reasons to Ignore Today's Decline

The Dow Jones Industrials lost ground today, but there's no need to worry. Here's why.

Feb 18, 2014 at 9:00PM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Investors came back from the holiday weekend in an uncertain mood, and the Dow Jones Industrials (DJINDICES:^DJI) finished down 24 points for the day. But even with the modest drop in the Dow, there were a number of reasons for bullish investors to be enthusiastic about the prospects for the stock market going forward. Let's take a look at three of them.

1. Financial stocks remained strong today.
The Dow's financial companies have a lot at stake in the various financial markets, but their performance today showed resiliency even in the face of some headwinds elsewhere in the average. JPMorgan Chase (NYSE:JPM) and Goldman Sachs (NYSE:GS) were the two biggest gainers in the Dow today, rising more than half a percent as shareholders start to focus on the lucrative fees that Wall Street firms earn on merger and acquisition activity. Today's announcement that Actavis would buy Forest Labs in a $25 billion deal gives JPMorgan Chase another win from advising Forest, with the New York Times saying that the company could earn $55 million to $65 million from the deal. With Goldman having scored some IPO successes in the recent past and with concerns about a spike in bond interest rates having seemed premature, the Dow's financials are holding up better than many would have given them credit for during January's correction.

2. Core industrial stocks are still delivering gains.
Even though financial stocks often lead the economy, eventually, the manufacturing base of the economy also has to kick into high gear. Boeing (NYSE:BA) today resolved an important open issue, choosing to build the wings for its 777X aircraft in its Everett location just north of Seattle. That puts the wing-production center close to where Boeing will assemble the rest of the aircraft, showing the positive consequences of a labor-dispute resolution that kept the aircraft manufacturer from having to make good on its promise to move its production facilities if workers couldn't come to an agreement. Share prices will rise and fall daily, but Boeing's business has solid prospects years into the future.

3. Remember the context!
It's always tempting to put too much weight on a day's movements, as though green ink or red ink should change your mood about your investments. But with investing, everything depends on the context in which you consider it. For instance, in the context of a 360-point gain last week, today's 24-point drop is insignificant. Last week's gain only earned back about half of the Dow's losses for the year. And of course, 2014's losses for the Dow are the tiniest of pullbacks compared to the huge bull market we've seen over the past five years. If you let one day affect you too much, you'll be too vulnerable to the emotional whiplash that stock investing can give those afflicted with tunnel-vision.

Don't be afraid to invest
A tiny drop in the Dow shouldn't keep you from putting money to work in the market, yet millions of Americans have waited on the sidelines ever since the market meltdown in 2008 and 2009, too scared to invest and missing out on huge gains. In our brand-new special report, "Your Essential Guide to Start Investing Today," The Motley Fool's personal finance experts show you why investing is so important and what you need to do to get started. Click here to get your copy today -- it's absolutely free.

Dan Caplinger owns warrants on JPMorgan Chase. The Motley Fool recommends Goldman Sachs and owns shares of JPMorgan Chase. Try any of our Foolish newsletter services free for 30 days. 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.

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.

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