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.


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!»

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.»

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

Norwegian Cruise Lines

Norwegian Cruise Lines (NCLH) is one of the “big 3” in the cruise industry. There’s a real growth story here thanks to a steady expansion in the firm’s ship count, along with an acquisition last year that gives it exposure to the high end of the market.

Constellation Brands

This maker of wines (Mondavi, Clos du Bois, Ravenswood), beer (Corona, Modelo and TsingTao) and spirits (Svedka, Black Velvet and Paul Masson) gets 89% of its revenues from the U.S. and 11% from Canada, so the strong dollar isn’t hurting.

Cheetah Mobile

My stock pick this week is a Chinese stock that was featured in the Other Stocks of Interest section of Cabot Growth Investor. (It’s also in the portfolio of Cabot China & Emerging Markets Report).

Cabot Wealth Advisory

Three Simple Options Strategies to Hedge Your Portfolio

By Paul Goodwin on July 02, 2015

Markets are used to all kinds of stressful events, and for the past year or so have taken the Greek debt crisis pretty much in stride. Up through last week, what we saw in the market was an unemotional averaging out of all investors’ estimates of the probability of a Greek default and the likely fallout (including Greece’s exit from the Eurozone).Read More >

Three Simple Options Strategies to Hedge Your Portfolio

By Jacob Mintz on July 01, 2015

On Monday, Paul Goodwin discussed the panic that sparked a greater than 2% decline in the markets on Monday. So how do you protect your portfolio from a pit bull and a swarm of bees?Read More >

Investors and the Genuinely Horrible Day

By Paul Goodwin on June 30, 2015

There’s nothing like a genuinely horrible day to get the attention of equity investors. Financial websites and online brokerage accounts must have registered a spike in visitors this morning as the investors who suffered through Monday’s storm tried to figure out which way the market’s winds might blow on Tuesday.Read More >