Analysts Center | Paul Goodwin

 

Here are some excerpts from Cabot Emerging Markets Investor, which seeks to capitalize on the enormous potential in emerging market countries. Chief analyst Paul Goodwin, Cabot’s international investing guru, provides your passport to profits.


Paul Goodwin can be found on Google Plus.

At Speed in Level Flight

Looking at the average trading volumes on U.S. exchanges by month reveals an interesting story. The lowest trading volume over the last 10 years has come in December. The highest trading volume occurs in January.»

Buying the Leaders is Critical

While the buy signal is important, stock selection is still key. With the long-term trend sideways, identifying and buying the leaders is crucial.»

The South China Sea Spat

The South China Sea dispute is a long-simmering affair and investors have long since priced their concerns into the market.»

Market Trend is Modestly Positive

We’re calling the indicator neutral until we see a decisive breakout or breakdown. Most importantly, our stocks are doing well as a group.»

Roller Coaster

While it doesn’t seem possible, the tsunami of analysis, prediction and advice following the Brexit vote may just be bigger than the tsunami that preceded it.»

Technically Positive

The Emerging Markets Timer is technically positive, but the intermediate-term trend remains mostly neutral.»

The Quiet MSCI Decision

While it didn’t generate banner headlines, emerging markets investors were deeply interested in a news item that came out after the market closed on Wednesday.»

Lack of Positive Sentiment is a Good Thing

The distinct lack of positive sentiment about Chinese stocks is a good thing for our portfolio, because any improvement in attitudes toward Chinese ADRs will give our holdings a boost.»

Perpetual Crisis

Despite this assault of negative speculation and prediction, global investors are sticking to their guns with enough tenacity to keep emerging market stocks on an even keel.»

Emerging Markets Action is Encouraging

Following a correction from mid-April through last week, stocks have shot ahead on no particular news, and we find that encouraging.»

Market Sentiment is Intriguing

Sentiment has clearly worsened lately, which has brought out the sellers and has been enough to produce a new sell signal from our Emerging Markets Timer last week.»

Warning Signal Flashing

EEM has recovered for a few days, but is still decisively in negative territory. With five of the companies in our portfolio yet to release quarterly results, we’re continuing to be cautious.»

What Could Go Wrong?

On Monday, we were treated to a perfect illustration of one big difference between developed and emerging market stocks. That’s the day it was announced that Baidu (BIDU) was under investigation by a Chinese internet regulator.»

Emerging Markets Trade Sideways

The EEM surged in mid-April and has now been trading sideways for a couple of weeks. Meanwhile, Chinese ADRs got a small bounce today that kept the PGJ above its 25-day moving average.»

Brazil Offers a Lesson on Emerging Markets

Emerging markets have a way of reminding us of why they are called “emerging.” And recently, Brazil has been doing the reminding.»

The Buy Signal is Clear

The Cabot Emerging Markets Timer continues to give a Buy signal, so we’re looking for opportunities to increase our exposure.»

Nice Recovery in U.S. and Emerging Markets Stocks

Both the iShares MSCI Emerging Markets ETF (EEM) and the Golden Dragon China ETF (PGJ) have experienced a quick pullback and a nice recovery.»

Watching for Stock Leadership to Develop

While the S&P 500 has been much stronger over the past year, iShares MSCI Emerging Markets (EEM) has actually pulled ahead since the beginning of March.»

Continuing Strength

The tone of emerging markets stocks has improved, as both the iShares MSCI Emerging Markets ETF (EEM) and the Golden Dragon China ETF (PGJ) have accelerated their rates of advance.»

Branching Out

We haven’t yet seen the kind of long-term rally in Chinese stocks that we need to achieve the outsized gains that will repay us for the extra risk we take on when we invest in emerging markets. »

Time to Do Some Buying

Investors seem to have digested the available information about the state of the national and global economies and the fortunes of growth stocks. »

Waiting for Old Friends

Just as in the U.S. market, much of the strength in emerging markets stocks has come from the bounce in stocks that have been taken off at the knees, not from expected future leaders. »

New Buy Signal, with Reservations

We have been enjoying an energetic uptick in stocks over the past few days. It’s a powerful move, although not yet decisive.»

Surviving the Bear

The Cabot Emerging Markets Timer, which looked last week like it might climb back on top of its moving averages, has now fallen back again.»

If Markets Hold Up ...

The next six trading days will see the worst of the January correction falling out of the 25-day moving average, so if markets hold up, we might get a new buy signal within a week or two.»

The Bad News is Out There

Any piece of bad news is like a bit of data entered into an enormous computer; it gets chewed up and added to all the other data and registered in the program’s output almost immediately. So when a piece of bad news hits the ticker, investing pros know that today’s reaction will be history by tomorrow’s open.»

Charts Say Play Conservatively

The crucial factor to watch right now is whether investors have stopped believing that the Chinese government has a plan to get its economy stabilized and growing again.»

Crunch

Skepticism and wariness seem to be the flavors of the week for many investors, and that’s part of a longer-term trend that extends far beyond the stock market.»

Things Have Turned Ugly

The iShares MSCI Emerging Markets ETF (EEM), which tried to bounce in mid-December, has been correcting hard, and is now nearly back to its August Meltdown lows.»

The Chinese Cliff Hanger

We don’t make forecasts about future events, but it’s a virtual certainty that the long-running story about the Chinese economic slowdown will remain in the headlines well into 2016. You can pretty much take that one to the bank.»

China Rally Continues

Chinese ADRs are continuing the rally that began in late September. That’s a welcome sign of strength from the biggest emerging market and speaks well for prospects in 2016.»

Fed Rate Hike Will Mean a Calmer Market

The Fed has finally (seven years!) taken the first small step in getting U.S. interest rates back to sane levels, and investors seem to be taking it the right way.»

China Market is Beating Them All

Surprisingly, PowerShares Golden Dragon (PGJ), which tracks most Chinese ADRs that trade on U.S. exchanges, continues to beat them all.»

Global Headlines, Local Gains

This week, the biggest news about China is the decision by the International Monetary Fund (IMF) to add the yuan to its list of global reserve currencies.»

Still No Consensus on Global Outlook

The Fed seems pretty certain to begin raising interest rates in December, but very little else is assured.»

Stock Selection and Flexibility are the Keys

We’re trading the best and leaving the rest (stock selection), while also having mental stops on most of our holdings, even if they’re acting well today (flexibility).»

Genuinely Significant News from China

The first news is that sales on China’s Singles Day (November 11) were up 60% from last year, making this sales event bigger than Black Friday and Cyber Monday combined.»

The China Bounce

If you want a good illustration of how quickly the stock market can digest bad news and beg for more, you just need to look at what’s happening with Chinese stocks.»

Emerging Markets Timer in Positive Territory

Many economic analysts see this as a fragile market rally, vulnerable to bad news, but what we see is a market that’s advancing. »

Business as Usual

Right now, enough investors are confident enough that China’s economy is doing well enough that they’re maintaining their exposure.»

Supporting Demand

In effect, GDP growth is the most valuable commodity in the world right now, and most countries are working to make it happen. And the preferred method for growing GDP is stimulating consumption.»

The Market May Have Found Support

It’s impossible to know how much of the Shanghai’s calm, flat trading is due to government buying, but it’s a reassuring pattern that’s typical of market bottom-building processes.»

Heeding the New Buy Signal

We have no predictions about the iShares MSCI Emerging Markets ETF (EEM)’s future movements, but we are heeding the new buy signal it has delivered.»

Still a Mess

while it looks like China’s program of active buying support for the Shanghai Exchange is keeping the exchange on an even keel, the other economic news out of China isn’t so hopeful.»

Stock Picks

Applied Materials

Its size and product diversification help insulate it from economic downturns, and its high quality products protect its market share.

Weibo

This social networking platform can be called the Twitter and Facebook of China.

Parsley Energy

All the characteristics of a big energy winner—if oil prices cooperate.

Cabot Wealth Advisory

Why I Remain Bullish on the Stock Market

By Michael Cintolo on July 28, 2016

Many pundits are saying the same thing: that the stock market is overbought and that a short-term correction is nigh. The charts tell a completely different story.Read More >

Three Big Trends and Three Small-Cap Stocks

By Tyler Laundon on July 26, 2016

Trend analysis is critical when researching small-cap stocks. And these three small caps are benefiting from some of today's biggest trends. Read More >

How Pokemon Go Is Like the Stock Market

By Timothy Lutts on July 25, 2016

Pokemon Go has swept the nation these last three weeks, and seemingly everyone (myself included) has joined in on the fun. It reminds me a lot of how the stock market works. Read More >