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

Selected insights from Cabot’s premium advisories


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

58.com

The online marketplace is helping businesses and customers find each other in the localized Chinese economy.

Illumina

The world’s leading developer and manufacturer of DNA analysis machines.

Ovascience

Currently, OVAS is digesting rapid gains, and appears to be forming a base. Any dips could be seen as buying opportunities.

Cabot Wealth Advisory

The Truth About Cabot

By Timothy Lutts on May 05, 2015

The Cabot offices are in a beautiful brick building, originally constructed for the City of Salem as a branch library, using WPA money, in 1933-1934. At the back of the building is a concrete access ramp. Today, though, the ramp doesn’t get much use: most of our communication is done digitally (via email, text-message or website).Read More >

Test Your Investing Knowledge: Stock Ticker Quiz

By Chloe Lutts Jensen on May 04, 2015

You might be surprised just how many stocks there are in the dividend-paying universe, and how varied they are. Read More >

Investing for Retirement

By Paul Goodwin on May 01, 2015

My contention is that most of us manage to put off thinking too hard about our financial futures until we hit 55.Read More >