Market Wrap-Up for Nov. 20 – Why Beating the Market Shouldn’t Be Your Primary Goal

On Wall Street there seems to be an obsession with beating the market. Whether it’s professional traders, wealth management institutions, or hedge, mutual, and pension funds, there is a strong desire to see an investment portfolio finish with returns above what the S&P 500 index performed in a given year. But this is the kind of mindset that dividend investors need to avoid, as there are more important goals to achieve.

Typically, this market-beating obsession is in place because these individual and institutional investors want to impress potential clients (and probably themselves) with their investment savvy, proving that clients need to invest their money with them rather than put it in a low-cost index fund. But for retail investors seeking solid returns over the long-run, an obsession with beating the market on a year-to-year basis may result in losing positions and unwise trades. Rather than focus on beating the market, you should focus on building wealth in the long-run, regardless of what the overall market is doing in a year.

After all, investing is all about making money, not proving to yourself that you’re a wise investor that can beat the market. It’s not a game, nor a competition. So what if your portfolio finishes off a year slightly below the market, if you’re seeing adequate gains year-after-year then that’s the important thing, right? Sticking to your sound dividend investing strategy will help you build wealth, eventually beating the market on the more important decade-by-decade basis.

Avoid Making Moves to Beat 2013′s Market

As we near the end of the year, you may be looking at your portfolio in disgust because it has come below the 25%+ gain in the S&P 500. In an attempt to finish off 2013 strong, you may be contemplating initiating various risky positions that will somehow boost your portfolio, but with the potential for big, unnecessary losses. Deviating from your long-term investing strategy just to beat the market this year could end up making it that much harder to reach your savings and wealth goals. Looking at your portfolio on a 12-month basis like this is the sort of short-term focus that we try to steer investors away from. Always remember to maintain your focus on your long-term goals.

Today in the Markets

Despite better than expected retail sales numbers released early today, stocks were mostly unchanged in early in today’s session. The major indexes held onto slight gains until around 2pm ET, when the Federal Reserve released the minutes from its latest meeting, which took place a few weeks ago. The markets quickly sold off as news that the Fed aims to taper its bond purchases “in coming months.”

Best Construction Material Companies To Invest In Right Now

Some big-name dividend stocks pulled back significantly more than the overall markets, including Staples (SPLS), following disappointing third quarter earnings; Lowe’s (LOW