3 Bull Market Mistakes in Growth Investing

By Mike Cintolo, Vice President of Investments and Chief Analyst, Cabot Growth Investor and Cabot Top Ten Trader
From Cabot Wealth Advisory Sign up for Cabot Wealth Advisory—it's free!

Finding the next big winners is one thing, but handling them is something altogether different. Most investors, “trained” by the prior bear market, tend to make three big mistakes:

First, they miss the new leaders because all their attention is focused on the old winners.

Second, they don’t realize that, at the start of a new bull market, leaders are shot out of a cannon, and often don’t come back. Thus, it’s best to pay up and not wait for a 10% or 15% correction, especially if these leaders have recently soared on a bullish earnings report.

Third, they often sell these leaders way too early, conditioned by the punishing bear market to take profits quickly. While volatility is usually high when the new leaders first come off the launching pad, the fact is, many can double or more during the first couple of months of a new bull market.

eResearch (ERES) is an example worth studying. Back in 2003, the stock actually broke out to new highs ahead of our buy signal, never pulled back (we bought on April 30) past its 50-day moving average, and rose 60% in just over two months. When it finally broke below its 50-day moving average in November, the stock was up 160% from our purchase price. 

Analysts Center

Our analysts regularly share content from their premium advisories. See a sampling of our analysts’ unique takes on current market conditions and how they impact a wide range of investments.

More on Growth Investing

Growth Investing involves a greater degree of volatility than dividend or value investing, but it has the potential for bigger rewards. Find out how.


Headline News

Stock Picks

Tesla Motors

If Tesla ever begins to cut back on development and innovation costs, earnings will soar.

Alibaba

China seems to be raising up its very own version of Amazon in Alibaba (BABA.

Facebook

Roy Ward uses the PEG ratio to determine if the stock is undervalued or overvalued.

Cabot Wealth Advisory

What Fed Speeches Mean for the Stock Market Today

By Chloe Lutts Jensen on September 29, 2016

Four Fed presidents gave speeches yesterday, and every word was digested by the stock market in an attempt to better predict the Fed’s next move. With odds of a December rate hike now about even, how should stock investors prepare?Read More >

The Emerging Market Stock You Ought to Own

By Paul Goodwin on September 27, 2016

The company I’m talking about (the one that you probably don’t own) is the largest Chinese instant messaging company. It is a giant in its own right, with a market cap of $262 billion and annual sales of over $19 billion. The company grew revenue by 28% in 2015 and routinely boasts after-tax profit margins over 30%.Read More >

Tesla Model 3 vs. Chevy Bolt: Which Affordable Electric Car Is Better?

By Timothy Lutts on September 26, 2016

The Tesla Model 3 and Chevy Bolt are the first two affordable electric cars with a driving range of more than 200 miles. Let’s see how they stack up - and what they could mean to Tesla Motors (TSLA) and General Motors (GM) stock. Read More >