As many of you know, I'm relatively new to Cabot, and while some of you have been with Cabot for years, others of you are as new, or newer, to it than I am. This probably means that you don't know all that much about each of our publications. To tell you the truth, it took me a while to get a handle on the eight newsletters that Cabot publishes, but once I did, the differences were as clear as day. Today I'm going to answer some of the most frequently asked questions about Cabot Market Letter. But first I want to introduce all of our publications.
You all know about Cabot Wealth Advisory, our free email newsletter, so I'll move along to the other publications.
Many beginning investors choose Cabot Stock of the Month because it offers just one stock each month selected from across the spectrum of Cabot's publications. One month it may be a Green stock and the next it might be momentum, but it's always the best stock for current market conditions. Cabot's publisher and frequent Cabot Wealth Advisory writer, Timothy Lutts, chooses the stock and edits the Report. Tim provides in-depth analysis of his selection as well as regular updates on previous stocks featured in the Report, so you have continuous guidance.
For faster-paced stocks, Cabot Top Ten Report is the newsletter to follow. The Report brings investors the 10 stocks with the greatest momentum in the market each week. Top Ten is a great source of new ideas, as many stocks are discovered here before anyone else knows about them. Top Ten is for aggressive investors who like to watch the daily fluctuations of the market. Michael Cintolo, who also edits Cabot Market Letter, selects the stocks and edits Top Ten with the help of OptiMo, our proprietary stock picking software.
If you're looking for diversification outside the U.S., China & Emerging Markets Report provides guidance on which stocks are hot in the BRIC (Brazil, Russia, India, China) countries. This report uses all of Cabot's time-tested growth investing techniques to select stocks that trade as American Depositary Receipts, or ADRS, on American exchanges. The countries these stocks are from are growing fast, providing enormous growth opportunity. Paul Goodwin, veteran writer and researcher, edits the letter.
Lately it seems everyone has been talking about Green, from energy to fertilizer, and there's no denying that a revolution is taking place. Cabot Green Investor, edited by Brendan Coffey, a veteran financial writer, is the place to find out about fast-growing, earth-friendly investments. All of Cabot's time-tested growth stock criteria are applied to the stocks in the newsletter to ensure that you are investing in the most promising stocks in this high-potential sector.
Some investors prefer conservative investments in well-known companies, and Cabot Benjamin Graham Value Report was made for them. The Report, edited by J. Royden Ward, a longtime investment researcher and analyst, provides investors with two different value-investing models and all the details you need to invest safely over the long term. So if you prefer to buy and hold this Letter is for you.
Cabot Small-Cap Confidential is a limited-subscription publication whose editor, Thomas Garrity, a lifelong investor, provides in-depth research about one company a month with revolutionary new technology that over time will grow into a winning investment.
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Now onto your questions about Cabot Market Letter.
Question: How long has Cabot Market Letter been around? Who is the editor?
Answer: Cabot's founder, Carlton Lutts, started Cabot Market Letter in 1970. Michael Cintolo now edits the Letter, applying the same time-tested systems that have worked throughout the years. Mike came to Cabot after graduating from college and discovering a love of the stock market when his father subscribed to Cabot Market Letter more than a decade ago. He uses his experience timing the market and picking growth stocks to build the Letter's portfolio.
Q: Who would benefit from Cabot Market Letter?
A: Cabot Market Letter is recommended for all investors seeking growth stocks. The Letter is not just about performance; it's also about education. Cabot Market Letter strives to educate investors by discussing the fine points of chart reading, investor perception and constantly reminds subscribers of the rules to follow to execute a successful investment strategy. We believe the more educated our subscribers are, the more they will benefit from the lessons we're teaching and stocks we're recommending.
Q: What's included in a subscription?
A: The Letter is published bi-weekly and contains a Model Portfolio of no more than 12 stocks of Cabot's best recommendations for a diversified growth portfolio. In addition to the bi-weekly issues of Cabot Market Letter, a subscription gives you access to a password-protected Web site, regular updates on stocks in the Letter and email contact with the editor.
Q: How are the stocks chosen?
A: The stocks chosen for the Model Portfolio must fit into the Cabot Market Letter investment philosophy. That means investing in fast-growing companies with potential for further growth of sales, earnings and investor perception. As you study the stocks in these growth industries, you should favor lesser-known stocks that have yet to reach the point of peak perception. The philosophy also advocates buying stocks with strong relative performance (RP) lines, meaning you should buy stocks that are consistently outperforming the market. This is a good indication that they are under accumulation, week after week, month after month, and that the companies are succeeding. Diversification is also important, for our Model Portfolio 12 stocks provide plenty of diversification. Smaller investors can do well with as few as five stocks, but you should never have all your eggs in one basket.
Q: How long are the stocks held?
A: The average growth stock is held for four months, but some are held for years and others for weeks. The key concept to keep in mind with these stocks is that investors' perceptions are usually ahead of the news. Even though we have high hopes for all these stocks, because their fundamental growth stories offer the potential of great future earnings growth, you take any news about your stock with a grain of salt. But you pay particular attention to what the chart is telling you, and when the chart tells you that investors are no longer supporting the stock, you sell the stock and move on.
Q: How do you use market timing in the Letter?
A: Be cautious when the broad market is against you and aggressive when it's with you. Don't underestimate the power of the market to move stocks, both up and down. When Cabot's market timing indicators are signaling a bull market, the trend is up, so stocks will be going up. Buy your favorite stocks and hang on as long as the ride is profitable.
Q: Do you advise subscribers about when to sell a stock?
Yes, we always advise investors to cut losses short. This is the key to ensuring that you retain enough capital to stay in the game. No matter how hard you try, you are going to select stocks that go against you as soon as you buy them. Get rid of these stocks quickly! It's also important to sell a winning stock when it loses its positive momentum. This is a clear indication that other investors are selling too. And a lot of them know more than you do. So don't wait for the company to tell you about the bad news. Sell first and read the bad news later.
I hope this helped you better understand the Cabot Market Letter, and our other publications, and what they have to offer investors. Please feel free, as always, to send questions, comments and suggestions via email or on the Cabot Forum, http://www.cabot.net/forum.
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Investment Advice You Can Trust
Cabot Market Letter is the fourth-best performing newsletter, up 36.7% over the last 12 months versus negative 5.76% for the dividend-reinvested Dow Jones Wilshire 5000, according to Hulbert Financial Digest. Cabot Market Letter consistently beats the market with its time-tested growth stock picking strategies and market timing indicators. Check out some of these past winners:
Expedia - up 114%
eResearch Technology - up 150%
Sigma Designs - up 414%
If you want to beat the market using a system you can trust, Cabot Market Letter is right for you. Click the link below to find out more.
In case you didn't get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, we have links below to each issue.
Cabot Wealth Advisory 5/19/08 - Getting in on the Ground Floor
In Monday's issue of Cabot Wealth Advisory, Paul Goodwin wrote about how markets are always going up and down, and if you have a way to distinguish a real market move from random motion, you can be back in the market before most investors know that the bull is back in town. Lumber Liquidators is Paul's new investment idea, which he likes for its story and chart. Stocks featured in this issue: Lumber Liquidators (NYSE: LL). Click the link below to read the full issue.
Cabot Wealth Advisory 5/22/08 - Buy Undervalued, Sell Overvalued
In Monday's issue of Cabot Wealth Advisory, J. Royden Ward wrote about how he arrives at the proper buy and sell targets for each stock featured in the Cabot Benjamin Graham Value Letter. Roy also wrote that Garmin, a stock recently featured in the Letter, is a great example of an undervalued company that will likely reach its Minimum Sell Price in one to two years. Stocks featured in this issue: Garmin, Ltd. (Nasdaq: GRMN). Click the link below to read the full issue.
Today's book has been recommended by every editor on staff and is frequently referred to in the office and in past issues of Cabot Wealth Advisory. The book is "Reminiscences of a Stock Operator" by Edwin Lefevre.
"Reminiscences of a Stock Operator," published in 1923, is the classic tale of the fictionalized life of one of the most flamboyant and successful investors ever, Jesse L. Livermore. The book tells the story of Livermore's progression from day trading in the so-called New England "bucket shops," to market speculator, market maker, market manipulator and finally to Wall Street where he made and lost his fortune several times over. Along the way, Livermore learns many lessons. Despite the book's age, it continues to offer insights into the art of trading and speculation.
That's all for today, I'll be back with you next Saturday. Enjoy the long weekend!
Until Next Time,
Editor of Cabot Wealth Advisory
Editor's Note: Get an idea of what each publication has to offer with Cabot Stock of the Month Report. It features one stock each month selected from across the spectrum of Cabot's publications. It could be a Green stock, value stock, growth stock, momentum stock or emerging markets stock, but it will always be the best stock for the current market conditions. Click the link below to learn more.