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.


Why the Stock Market is Headed Much Higher From Here: And Why Now is the Right Time to Buy

Today I want to write about one unique subset of indicators I track. These indicators don’t speak often … but when they do, they have a history of pointing to healthy gains in the months ahead. And one is speaking now. I call these “blastoff” indicators, and they’re meant to spot rare displays of power from the market in terms of breadth or volume.»

Which Way Do U.S. Stock Markets Go From Here?

U.S. stock markets have been on a tear since the Brexit panic quickly subsided. How much longer can they keep it up? One look at the S&P 500 chart gives plenty of reason for optimism. »

Buy Biotech Stocks, Sell Retail Stocks Before Next Sector Rotation

Investors continue to cycle in and out of different sectors, and biotech stocks are next in line to benefit from that sector rotation. »

The (Very) Long-Term Stock Market Outlook Looks Bright

After a brief downturn, the stock market appears poised to make another multi-year run to new heights. »

Oil and the Stock Market: A History

Oil and the stock market are moving in tandem now. But as these two charts show, that's rarely been the case. »

Three Important Lessons from the LinkedIn (LNKD) Stock Collapse

The 45% overnight drop-off in LinkedIn (LNKD) stock stands as a cautionary tale for other growth stocks with flimsy fundamentals. »

As Stock Market Losses Mount, Focus on These Positive Trends

The stock market losses continue to pile up, and it's discouraging for any investor. But there are positive signs if you look closely enough. »

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!»

Investment 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 Deal with Stock Market Losses

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.»

Seven Short Selling 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 do it, here are seven short selling 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

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 >