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 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

Tesla Motors

If you’re not on board the stock, there’s no rush. Wait for a better entry point in a more constructive market.

Church

Church & Dwight owns the Arm & Hammer, OxiClean and Trojan brands, as well as some smaller, faster-growing brands. But even after a 35% climb in 18 months, Church & Dwight still looks strong and poised for further gains.

Restoration Hardware

Restoration Hardware (RH) has been on my watch list for a long time. Believe it or not, I’ve been watching the stock for about a year—it was my Top Pick at the 2014 Cabot Investors Conference, nearly one year ago—and now, after a ton of starts and stops, shares look poised to get going.

Cabot Wealth Advisory

Things I Didn't Do Last Week

By Timothy Lutts on August 04, 2015

In general, I think the future is pretty bright. By all measures, the world’s population today is better-nourished, better-educated and less violent than at any time in history. The long-term trends for the world as a whole look good. And if you’re going to be a successful investor, it truly helps to have a long-term perspective—to be able to imagine the possibility of holding onto a stock for ten years or more. Admittedly, that’s hard to do, with the media’s focus on the short term. And in the year ahead it may get even more difficult, as the noise from the current record-setting G.O.P. Presidential field—and indeed, all the election-oriented activity of the next fifteen months—serves as a constant distraction from the task/pleasure of managing your own money.Read More >

The Best Consumer Stocks For Retirees

By Chloe Lutts Jensen on August 03, 2015

Retirees should choose consumer sector stocks with well-established brands, reliable earnings, and a history of paying regular dividends. They might not be as exciting as Amazon, but these companies can add a reliable income stream to your portfolio while also providing upside.Read More >

Beach Weather in the Market

By Paul Goodwin on July 31, 2015

It’s the beginning of August, high summer in New England, and a bit of summer fatigue is setting in. Summer in New England is short, so we try to pack half a year’s worth of cookouts, beach days, hikes, kayaking, sight-seeing and other outside recreation into three months. It’s fun, but the pace can be a bit frantic, especially as the season enters its third act. Frankly, all I want to do now is lie on a beach somewhere and read a book. Read More >