Nick's Opinion on the Markets

I must admit, I've been keeping my eyes relatively shut with regards to my portfolio and watchlists. Yes, I have less time to spare, but I think that my ignorance is mostly the result of the bipolar nature of the markets. I've lost some patience: some days the markets are up 5%, the next, they're down 7%. Fortunately for me, as you might remember from my post "To Invest or not to Invest", a long-term investor  needn't look at the markets on a day-to-day basis. However, each day now, I seem to find new opportunities despite the market's negativity.

First, there are a few industries that have done well in the face of the European debt crisis and the inherent risk of terrible recession. These include utilities, telecommunications companies, and the bigger tech giants of the NASDAQ. I can't say for sure why these companies have performed so much better in the past few months. I'm led to believe that the product offerings of the telecom and utilities companies are perceived as being more essential to their consumers. Therefore, consumers' spending habits won't change as drastically, even if they have less discretionary income. Is this the case for a company like Apple as well? I certainly hope that if someone has lost their job, or was recently made the victim of some kind of company pay-cut, they do not feel the need to purchase a $700 iPad. Assuming this is logical reasoning, companies like Apple and Google must be doing well because investors are not convinced that their growth will stagger as a result of poor economic conditions.

Personally, I'm paying closer attention to companies in the financial industry. Banks and insurance companies have taken huge hits, are attractively priced, and offer high dividends. Poor market conditions have forced these companies to record huge losses on their financial statements, but these losses are unrealized. Therefore, these losses are almost misleading with regards to the companies' actual performance. For example, Sun Life Financial is down more than 30% in the last couple of months. This means that the stock is now trading at a very attractive P/E of around 6, and that what used to be a 5% dividend is now a 7.5-8% dividend. With a market cap over $10 billion, the company isn't invincible, but one might argue that it's "too big to fall". So while a company like Sun Life is subject to the extreme volatility of the markets, it also offers an extremely attractive dividend that compensates the investor for unrealized losses with actual fixed income.

High-paying dividend stocks are really attractive for me right now because they're the only aspect of the market that I can feel sure about. I understand that the Board of Directors can easily reduce the amount of dividends paid, or stop them altogether. However,  the uncertainty regarding the BOD's decisions to declare dividends is minuscule compared to the uncertainties of the markets in general.