This is a big heads up.... and while the MARKET could be wrong --- it seems that the YIELD CURVE is headed UP. Which means that mortgage borrowing is strong because housing sales are strong.... and the FED seems to be signaling that they're going to or are about ready to taper their bond buying (QE - Quantitative Easing).
With the HUGE run up in CAPITAL (Share prices) we've had -- my guess is the big money is going to scoop theirs off the table... and start to buy other stuff --- which you'll start hearing the word "ROTATION".
When you do the math -- the market has run about 17% this year (that's just giant given it's not even a half a year yet!).... So it doesn't surprise me that the fast money would be selling and taking their profits.
If you've made 15% capital appreciation -- and you're trading millions / billions of dollars -- you start to sell the dividend shares (you get 4% - but you've made 15%) and ROTATE into shares that would deliver GROWTH in a better economy.
But then what you have is share prices dropping --- but the YIELD goes up as the share price drops... and then you have all that cash that was "made" now has to go somewhere --- we can't have employees on vacation for very long - and that money lands somewhere.
Think about a tree full of doves -- you shake the tree -- all the doves fly up -- and then they land back on the tree - but on a different branch.
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Does this mean you should log in and sell everything and sit waiting for better prices?
No probably not. Your dividend stream will continue -- it will buy shares at lower prices -- building your share count faster -- paying more dividend -- buying more shares. IF the market - thus prices - are high - your dividend doesn't buy as many shares - and you build shares slower. So in actual fact - you want share prices down... Remember that the dividend is paid in DOLLARS not percentages.... so provided the dividend isn't cut -- then the PERCENTAGE you're earning on those new share purchases is higher... the lower the share price goes -- the higher the percentage you're earning on your money.
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I've been warning for awhile now -- to remember what it feels like to be in a market like this -- where every day you're up. That isn't normal - not normal at all..... But remember your goals! Your goals are 10 - 20 years away.
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