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Starbucks [stckqut]SBUX[/stckqut] said it would pay its first-ever dividend, totaling 10 cents a share. The company also increased its share-buyback plan.

The share-buyback will likely help the stock price (as well as the dividend will encourage some people to buy). However, if you are correctly managing your portfolio by avoiding downturns in the stock, it is easy to miss dividend payout dates so be careful in buying this stock JUST for the dividend. You may do better to watch the market movement and minimize your losses when the market drops – foregoing the dividend check.

My last analysis of Starbucks had them ranked as a Poor Company.

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The market for most stocks right now is flat (and some are moving down). Except for a few stocks, it really doesn’t make sense to have your hard earned money invested. Depending on your favorite indicator, most are showing the good companies to be in an over-bought condition. This condition is likely to continue through the week (or longer).

It doesn’t help that the US market is trying to figure out what ObamaCare is going to do to individual companies. Some will win and some will lose on ObamaCare – the challenge is to figure out what is going on.  That consternation is likely adding to the current flat market in most stocks.

Don’t be afraid to take a short-term break from a position. You don’t lose money in this environment by watching from the sidelines as a stock retreats a bit from its latest highs. The best thing about a downward move is that it gives you a better price when the stock starts to move up.

It is the nature of mankind to want to spend money that is sitting around. Be patient. Let your investment capital earn money market rates and then you will be in a position to take advantage of a move up when the time is right.

There are a few stocks that are still showing some price growth but it is likely that if you are not currently invested in those companies then you may be too late.  To get a good idea of the stocks that I am invested in, the Watch List to the right are the companies that I currently think are worthy of my money. However, with the current bears running all over the place, I am not holding significant shares in some of them – I am taking my own advice and waiting for them to start moving up.

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According to USA Today, the average income tax refund is up 10% over last year. You can expect a few outcomes that may affect how you purchase stock. The most obvious example is that big ticket items that need a down payment may take a slight boost.  The people that have been saving for a new TV, car, or home get a windfall check, they may accelerate their purchase. The obvious benefactors here are Ford [stckqut]F[/stckqut], GM [stckqut]GM[/stckqut], and Toyota [stckqut]TM[/stckqut].

Similarly, vacations may be a bit better this year because of this extra cash and that could affect destination stocks such as Disney [stckqut]DIS[/stckqut] or Marriott [stckqut]MAR[/stckqut].

However, the smart money doesn’t spend the extra money on incidentals. A much better strategy is to take a look at one of the stocks on my Watch List to the right and buy one of these securities when the market triggers say that they stock is ready to move up.  That way you take your extra “free” money and multiply it into more free money! If the average increase is a bit over $3,000 as the article claims, that is 25-100 shares of most of these companies.

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I have reviewed Apple [stckqut]AAPL[/stckqut] on this site before.  I rank it as a Good Company that you should consider for your portfolio.

Currently, the Internet is buzzing with guessing about the number of iPad’s that were sold in the first day of orders. The best estimate that I see is about 120,000 units. While this is an impressive number of units, it DOES NOT mean you should buy or sell the stock of Apple!

You should only invest in companies that have a history of doing well. They need to be consistently listening to their customers, developing products that their customers want to pay for, and selling those products at a profit. The fact that Apple is a Good Company is indicative of this long trend. You should buy the stock because they consistently deliver – not because they came out with a cool product.

Disclaimer: Since I trade in and out of stocks depending on the activity of the market, I may or may not own Apple Computer at the time that you read this but since they are a Good Company, I am definitely considering being a stock holder. If you want to know more about my trading practices and how it relates to this site, please read my disclosure page.

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To be honest, I never considered this approach before.

I typically do not like paying fees to fund managers. I am especially skeptical of standard mutual funds when their track record can be worse than the market almost as frequently as above the market.  According to that great champion of individual investors, Motley Fool:

The average actively managed stock mutual fund returns approximately 2% less per year to its shareholders than the stock market returns in general.

Most of my advice is to pick great companies and invest in them with caution, taking profits when the market moves against the company’s stock. I do suggest that a certain portion of your portfolio reside in index funds – I typically tell people to pick their favorite broker and buy a DOW index fund, a S&P index fund, and at least one international index fund.  I rarely care about the brand since we are just trying to match whatever the market is doing.

Crossing Wall Street just did a great post describing a fairly mathematically correct method of creating your own S&P Index fund.  This would allow you to avoid any fees leveraged by the index fund management company.  Not a bad idea.  Note though that not all of these companies are Good Companies (in fact at least one of them is a Poor Company) but that is okay since you are only investing in these companies because they are your own home-grown index fund.

Looking to build a quick-and-easy index fund? Of all the stocks in the Dow, United Technologies [stckqut]UTX[/stckqut] has had the strongest daily correlation with the S&P 500 going back to the beginning of 2005. Each day’s UTX gain or loss has a 69.7% correlation with the S&P 500.

If add in Dupont [stckqut]DD[/stckqut], the correlation jumps to 80.5%. (Note this is average daily change, so it assumes you invest equal amounts each day.)

If you add is Disney [stckqut]DIS[/stckqut], the correlation rises to 85.4%.

Now the extra correlation really is hard to come by. If you add ExxonMobil [stckqut]XOM[/stckqut], the correlation rises to 88.9%.

Still more?

If we add American Express [stckqut]AXP[/stckqut] the daily correlations rises to 90.6%.

Verizon [stckqut]VZ[/stckqut] brings it up to 92.6%.

If you want to go for seven stocks, IBM [stckqut]IBM[/stckqut] will bring you up to 94%.

Now we’re almost out of room. Wal-Mart [stckqut]WMT[/stckqut] will bring our eight stock index fund up to a 95% daily correlation with the S&P 500. This is, of course, an equally weighted fund.

Obviously, you will spend $15-$20 per stock as you buy and eventually sell each stock (I assume you know where to buy or sell a stock for $7-$10). this may make this strategy not work for you depending on the amount that you invest in your “fund” so do the math before you get online with your favorite broker.