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NASDAQ Close To New High - By Charles Payne

This is the week NASDAQ could join the other major indices and rally to new all-time highs. The index peaked on March 10, 2000, at 5,132. It proceeded to collapse 63% in the next year (see arrow).

While the other indices recovered to new highs by 2007, this will be the first time NASDAQ has been close.

Naturally, this invites talk of a market top and valuation but that is misplaced in my mind. Back then, the four horsemen (Dell, Intel, Cisco, and Microsoft) led the index. Dell was taken private and the other three are nowhere near their old valuations; both from PE ratios and market cap.

Fallen Horsemen and Valuation
PE (forward)

INTC

MSFT

CSCO

2000

41

51

100

Current

13

15

13

Fallen Horsemen and Valuation
Market Cap

INTC

MSFT

CSCO

2000

$509

$642

$557

Current

$162

$386

$159

How to Max Your 401K

While medical expenses rank at 28%, the biggest worry is that the next three will add up to 51% and it can be mitigated with the right approach to investing.

Of all the tweets and emails I receive, investing in a 401K is always among them. Coupled with growing anxiety over finances in retirement, it's a topic I want to address over and over. A 401K is a retirement plan sponsored by an employer where taxes aren't paid until money is taken out.

Let's talk about the rules for maximizing your 401K:

  • Don't be too conservative
  • Don't overtrade
  • Stay balanced
  • Invest heavy- 50%+ in Dividend Aristocrats

The Dividend Aristocrats are S&P 500 constituents that have increased their dividend payouts for 25 consecutive years. The list currently covers ten sectors. After peaking in 2009 at 52 companies, it slipped to 42 the next year, and bounced back to 53 in 2013 where it remains today.

Here's the difference dividend ideas can make in your portfolio. This chart differentiates different categories if you invested $100 in 1987:

  • Growers (Aristocrats) $4,500
  • Payers - $2,500
  • Non-payers - $700
  • Cutters - $700

If you want a buy and hold for your 401K, HCP is an aristocrat superstar and a solid business that probably gets better over the years.

Today's Session

Company

EPS

Cons.

Revenue ($M)

EPS Guidance FY15

EPS Consensus FY15

CMCSA

0.77

0.78

$17,732

-

3.30

DPZ

0.91

0.93

$643

-

3.39

HD

1.00

0.89

$19,162

FY16 5.11-5.17

FY16 5.23

M

2.44

2.40

$9,360

FY16 4.70-4.80

FY16 4.85

SAFM

2.87

3.03

$667

-

11.63

TOL

0.44

0.29

$854

-

1.95

VAL

0.85

0.76

$992

4.45-4.65

4.59

HD

  • Same store sales total +7.9% year-over-year
  • Same store sales (American) +8.9% year-over-year
  • Dividend $0.59 from $0.47

Toll Brothers (NYSE:TOL) earnings beat this morning also speaks to the bifurcated nation of haves and have-nots.

Additionally, sales of existing homes may be slow but price traction is appearing, as indicated in December's reading of the Case-Shiller's adjusted 20-city index. For the month, the index shows a sharp month-on-month gain of 0.9%. This is the strongest monthly gain since March 2014. Year over year, the index popped by 4.5% which is higher than the 4.3% in November and the consensus estimate of 4.3%.

We will have further details in today's Afternoon Note, but I also want to announce that Robert Shiller will be my guest tonight on Making Money with Charles Payne.