Stock Market Investing

Stock market investing has always been an effective way to build wealth. In today’s world of near-zero interest rates, it has become a necessity.

Since the Great Recession in 2008, the Federal Reserve has kept short-term interest rates—called the “federal funds rate”—at basically zero. That means the traditional ways of saving your money and watching it accrue—certificates of deposit, money-market accounts, Treasury bonds—are no longer viable. Stock market investing is one of the few viable ways to have your money work for you these days.

Of course, stock market investing comes with more risk than a safe, low-yield savings account does. Inevitably, not all of your investments will be winners. 

In investing, no one really knows for sure what’s going to happen. Every stock you buy amounts to a flip of the coin, with an equal chance that it will rise or fall. 

Over time, however, stocks tend to rise. History tells us this. Since 1928, the average annual return in the S&P 500, the benchmark U.S. stock index, is 11.5%. So historically, the average stock rises 11.5% per year. 

Successful stock market investing is largely dependent on timing. You can’t just buy any stock and assume it will turn a profit, much less return 11.5%. You have to buy the right stocks at the right time.

For example, if you bought stocks in 2011 and sold them at the end of the year, you probably didn’t fare so well. The S&P 500 was essentially flat that year. However, if you bought stocks at the beginning of 2012 and held on to them through 2014, you probably made a lot of money. The average annual return from 2012-2014 was 20.5%. 

Even then, your return would have depended on what stocks you actually bought. Take Apple (AAPL), for example. The largest and most recognizable technology company in the world has been perhaps the single best-performing stock of the past decade. But Apple had a rough stretch from September 2012 to June 2013, falling more than 43% at a time when most stocks were reaching record heights. The rising tide of the market doesn’t necessarily lift all boats—even the biggest boat. 

That kind of unpredictability scares some people away from stock market investing. The track record over time should be enough to convince you otherwise. 

The stock market is a vast and ever-evolving place, and there are many ways to approach stock market investing. Want to invest in safe companies that offer a steady stream of income? You should probably be a dividend investor. Are you willing to take on a bit more risk to go after bigger, faster rewards? Growth investing is likely for you. Value investing is for investors who like to bargain shop. Options trading is for those who like to invest based on statistical probabilities. And so on.

At Cabot Investing Advice, we have something for every investor. We publish 11 newsletters that cater to various types of risk tolerances and timetables, depending on your preference. Since 1970, we’ve been helping investors of all experience levels achieve market-beating returns, helping our readers double their money 28 times over.

When done right, stock market investing can be a hugely profitable endeavor. For nearly a half-century, we’ve been helping investors maximize those profits—and hope to continue doing so for another 50 years.

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.


Debunking 3 Media-Driven Reasons for this Stock Market Collapse

This stock market collapse has lasted longer than some thought, leading the mainstream media to scramble for an explanation. The real reasons for the extended downturn are simpler than you think. »

Latest Collapse a Symptom of the Donald Trump Stock Market

The market collapsed again on Wednesday. Another drop in oil prices was the reason, analysts say. I say it's a symptom of the Donald Trump Stock Market. »

Five 2016 Stock Market Predictions Sure to Be Wrong

2015 is coming on an end, which means everyone under the sun is rolling out their 2016 stock market predictions. Here are five that are sure to be wrong. »

2015 vs. 2011: A Stock Comparison, and What It Could Mean for 2016

A stock market comparison between this year and 2011 draws some eerie parallels. What does that mean for the market in 2016? More than you'd think. »

Santa Claus Rally and January Effect

Is the Santa Claus Rally real? It’s a decent question this time of year, especially this year. »

Five Market Drivers that are Much More Important than the Fed

Everyone is focused on when the Fed will raise interest rates. But there are far more important issues that could affect your portfolio in the coming months. »

Why Bold Market Predictions are Meaningless

Stock market predictions are easy to make. They're also utterly meaningless - and potentially dangerous if you listen to them. »

Is a Market Correction Such a Bad Thing?

It's official: we're in the midst of a true market correction? That's causing widespread panic on Wall Street. Here's why it shouldn't. »

Five Takeaways from the Cabot Investors Conference

Last week's Cabot Investors Conference featured some of the best market insight from our top advisors. Here are my top five takeaways from the two-day event. »

Why You Shouldn't Waste Your Money on Gold Miners

Gold miners may look like a smart bargain play. But given the track record in gold the last four years, it's not worth the wait. »

10-Word Stock Market Timing

Here it is, in just 10 words: Market goes up, get in. Market goes down, get out.»

A Big Earnings Gap? From a Mega-Cap Stock? Buy It!

One of my oldest trading rules is simple: Never underestimate a big, mega-cap stock that gaps strongly higher following its quarterly report. »

Rising Interest Rates and the Stock Market

It turns out that rising market rates, and even periods of tightening by the Federal Reserve, aren’t death knells for the stock market. And, rising rates often coincide with powerful bull markets!»

Portfolio Management

Both professional and novice investors sometimes forget that the objective is to make money, not to own every good-looking stock in the market. »

Uncertain Market Direction Reaching Historic Levels

That constant tug-of-war between the bulls and the bears has been a recurring theme of late. And the back-and-forth market direction has reached historic levels.»

Year-End Portfolio Review Helps Set Goals for Next Year

Each year end, I review my investing strengths and weaknesses, examining stock charts of previous buys and sells, comparing them to market action, and so on. »

Airlines Stocks are Looking Toppy

The stock market is always looking ahead, and though earnings are huge, it looks like the airline sector has topped out. Look at the Airline Index (XAL).»

Eight Tips Based on How the Stock Market Actually Works

Mike Cintolo shares tips based on how the market actually works...as opposed to how many investors think it works. »

The Conservative Aggressive Investor

Using position sizing and offensive selling to reduce growth stock investing risk.»

Cut Losses Short

Paul Goodwin tells why growth investors need a disciplined sell strategy.»

Six Tips on Handling Earnings Season

A few observations on earnings season to help you maintain an even keel.»

How to Handle A Stock Market Loss

No one picks winning stocks every single time. At some point, you will have a stock loss. Knowing how to handle it will make all the difference.»

The Best Time to Buy Stocks

The early bird gets the worm ... except in the stock market. »

How to Manage Risk During Bear Markets

A bear market is not tolerant of aggressive behavior. The effects of your mistakes are magnified—the secret to surviving the bear market is adapting.»

Short Selling in the Stock Market - 7 Tips

Go long, the best you can do is unlimited gains. Sell stocks short, the best is double your money. But if you're determined to sell short, here are 7 tips.»

SNaC: the Cabot Approach to Picking the Best Growth Stocks

The best stocks have a good stories, numbers, and charts. »

Bull Market Beginnings

The moment of maximum hopelessness marks the start of the next bull market.»

How to Watch Your Stocks

Checking your stocks often probably doesn't do any harm, but it does reveal something about you as an investor. »

The Stop-Loss and Its Importance at Earnings Season

Stocks can rise on hope, but a bad earnings report can do a Hindenburg on an individual stock.»

Don't Ignore a Stock's Volume

When the stock market finally gets going on the upside, paying special attention to volume spikes allow us to clue in on the advance’s best stocks.»

Stock Picks

Prudential Financial

This stock stands out because it easily fits all of Benjamin Graham's criteria.

Whirlpool

With home-building strong, this stock's prospects for recovery are excellent.

Nevro

NVRO is still behaving well, supported by the buying power of investors who are just discovering the stock.

Cabot Wealth Advisory

The Growth Stock Diet

By Paul Goodwin on February 11, 2016

While there isn’t any substitute for the diet and exercise you promised yourself you’d do six weeks ago, there’s a stock diet that will allow you to make huge progress in your equity portfolio. It’s called the SNaC Diet, and it’s the best way to get your portfolio in shape, even if you can’t seem to make progress in the campaign against your love handles. SNaC stands for Story, Numbers and Chart, and it’s the method I use to pick growth stocks for the Cabot Emerging Markets Investor.Read More >

Five Steps of a Market Bottom: Where are We?

By Michael Cintolo on February 09, 2016

In my January 28 Cabot Wealth Advisory, I wrote about the five key characteristics to look for as the market builds a bottom. The market has deteriorated further since then, so I thought you’d benefit from brief updates in my upcoming Wealth Advisories (starting today) so you can see how the process is playing out until the bulls re-take control of the market.Read More >

Apple (AAPL) and Zika

By Timothy Lutts on February 08, 2016

The best time to buy Apple (AAPL) was in 2003 after the Internet Bubble had burst and technology stocks were treated like dirt. Of course, no one wanted AAPL back in 2003, but in the 13 years that followed, the stock soared 9,400%. The best time to sell AAPL was in mid-2012, when AAPL became the world’s most valuable company. Read More >