Dividend stocks beat the S&P in July. Wall Street analysts looked at this data point from last month and decided these same stocks will keep winning. This is called research.
The logic works like this. A thing happened. Therefore the thing will keep happening. You could apply this to literally anything. The Mets won yesterday so the Mets will win tomorrow. Your wife stayed with you in July so she'll stay in August. A boulder rolled downhill so it will roll uphill next.
Investors turn to dividend-payers during volatility, which explains why they outperformed during a month when the S&P also went up. Nothing says defensive positioning like buying stocks in a market that's rising. Real bunker mentality stuff.
The analysts issuing these calls get paid whether the stocks go higher or lower. You do not. They have healthcare and a 401k match. You have three shares of AT&T you bought because your uncle said dividends are free money. They will be fine in September. You will be checking your Robinhood account at 3:47 AM wondering why your portfolio is red when you did everything the experts said.
The beautiful part is the circularity. Stocks went up so analysts said buy them so retail bought them so they went up more so analysts upgraded their price targets so more retail bought them so they went up again until they didn't. Then everyone will ask what happened, as if gravity was invented that morning.
But sure. Chase July's winners in August. What could go wrong. It's not like markets ever reverse or momentum ever stops or analysts ever issue downgrades three weeks after upgrades. It's not like you're the last person in a chain of decisions made by people with better information and faster execution. You're not the exit liquidity. You're a smart investor who reads summaries of analyst notes and makes informed choices. Wall Street thanks you for your service and also your money.
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