Where January leads, the rest of the year follows: That Wall Street adage has generally held up for most stocks over the years.
But it definitely has not for utilities—they’ve received a false signal 10 times in the past 30 years.
The keys to 2014 are ensuring the health and growth of the stocks you own, and buying selected bargains. These appear when investors let emotions get the better of them, or follow strategies based on false premises.
The most deadly conventional wisdom last year is still very much in play now: Selling utilities and other dividend-paying stocks for fear of rising interest rates.
As it turned out, rates did rise a lot in 2013, with the 10-year US Treasury note yield soaring more than 70 percent. But the Dow Jones Utility Average, Alerian MLP Index and S&P Telecom Service Index all finished 2013 with double-digit total returns.
That’s exactly what they did in 2009, the last time the 10-year Treasury note yield rose by better than 70 percent. In fact, the trio’s worst year by far since 1984 was 2008, a year of sharply falling interest rates.
Invest Smarter! Join Conrad’s Utility Investor!
Smart investing. Taking advantage of real opportunities and not fads (and knowing the difference). Finding the companies and stocks that will deliver for the long haul, so investing lets you live instead of investing turning into your life. Roger Conrad has dedicated his career to these principles—and that’s what Conrad's Utility Investor delivers.
Roger's favorite utilities for investors seeking superior price appreciation by taking calculated risks.
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Warning: Falling Dividends.
Roger's current take and vital statistics on more than 200 essential-services stocks.