Goldman Sachs and IBM Lead the Dow Jones to Record High

The DJIA hit a record high earlier today as the stock market climbs across the board.

May 12, 2014 at 1:41PM

Goldman Sachs (NYSE:GS) is leading the Dow Jones Industrial Average (DJINDICES:^DJI) up to a new record high as tech stocks rebound. As of 1:30 p.m. EDT the Dow was up 101 points to 16,684. The S&P 500 (SNPINDEX:^GSPC) was up 15 points to 1,894.

Small-cap stocks have sold off this year, down 5% year to date, led by overheated momentum stocks, particularly in the technology and biotech sectors. The Dow Jones has not really been affected by this sell-off as it only includes large, blue-chip stocks. The index reached a new intraday high of 16,695 points earlier. The S&P 500 is also up nearly across the board, except for utilities and some consumer staples.


Goldman Sachs is up 1.6%, leading the Dow Jones higher today after Barron's made a case for owning Goldman Sachs over the weekend. Barron's column "The Trader" highlighted Bernstein analyst Brad Hintz's case for Goldman Sachs. He argues that while Goldman and the other capital markets banks are facing headwinds, most recently seen in JPMorgan's trading-revenue warning, pricing will get better as new regulations and greater capital requirements mean weaker companies will leave the business. Already, UBS and Morgan Stanley have moved to lower the contribution of their capital-markets businesses, and then last week Barclays announced it plans to cut 7,000 jobs in its investment-banking business to focus on areas where it has strong competitive advantages.

Also leading the Dow up higher today is IBM (NYSE:IBM), up 1.3%. Over the weekend, The New York Times interviewed IBM CEO Ginni Rometty, who acknowledged that the company is going through a "rocky time" but refreshingly offered a long-term view. While analysts are focused on the short term, and many continue to note that IBM has missed revenue expectations for five quarters in a row, Rometty kept her eyes on the big picture, saying: "We are transforming this company for the next decade. That is not a one-year job, not when you're a hundred billion-dollar company."

The company has been divesting lower-margin businesses -- most recently selling its x86 server business to China's Lenovo Group for $2.3 billion -- and expanding into cloud computing. IBM has made some high-profile investments in cloud computing, particularly with its Watson unit, which developed the computer system that famously won Jeopardy!.

At the same time IBM is investing in its business, it has also been returning cash to shareholders through regular dividends, which have risen 500% over the past 10 years to $1.10 per quarter for a 2.3% yield. A strong business that takes a long-term view with smart capital investments is the hallmark of Warren Buffett's strategy. As one of IBM's largest investors, Warren Buffett is betting that the company will be profitable for years to come.

Warren Buffett just bought nearly 9 million shares of this company
Imagine a company that rents a very specific and valuable piece of machinery for $41,000 -- per hour (that's almost as much as the average American makes in a year!). And Warren Buffett is so confident in this company's can't-live-without-it business model, he just loaded up on 8.8 million shares. An exclusive, brand-new Motley Fool report details this company that already has over 50% market share. Just click here to discover more about this industry-leading stock and join Buffett in his quest for a veritable landslide of profits!

Dan Dzombak can be found on Twitter @DanDzombak or on his Facebook page, DanDzombak. He has no position in any stocks mentioned. The Motley Fool recommends Goldman Sachs. The Motley Fool owns shares of International Business Machines. 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.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

Something big just happened

I don't know about you, but I always pay attention when one of the best growth investors in the world gives me a stock tip. Motley Fool co-founder David Gardner (whose growth-stock newsletter was rated #1 in the world by The Wall Street Journal)* and his brother, Motley Fool CEO Tom Gardner, just revealed two brand new stock recommendations moments ago. Together, they've tripled the stock market's return over 12+ years. And while timing isn't everything, the history of Tom and David's stock picks shows that it pays to get in early on their ideas.

Click here to be among the first people to hear about David and Tom's newest stock recommendations.

*"Look Who's on Top Now" appeared in The Wall Street Journal which references Hulbert's rankings of the best performing stock picking newsletters over a 5-year period from 2008-2013.

Compare Brokers