Innovation Leads to Solutions

 
When I left work on Thursday, it seemed a deal had been reached on the government's $700 billion bailout plan, but by the time I arrived back in the office yesterday morning, the agreement had unraveled.

While lawmakers had promised to take a bipartisan approach to the situation, it appears that House Republicans were unwilling to sign off on using so much taxpayer money to bail out Wall Street while ordinary Americans are hurting. Many people wanted more stringent oversight in the plan, while some seemed to want to get the whole thing settled and see some calm come into the markets.

As I write this, talks are resuming among lawmakers in what will likely prove to be a very exciting day. Public outcry was voiced loud and clear on both sides of the issue, with many people outraged by the bailout while others resigned themselves to the plan as the only way out of the financial turmoil. Talking heads were each yelling louder than the next on all of the TV news programs on Thursday night as the deal was falling apart, with every viewpoint seeming to have a spokesperson. But few, if any, were equipped with any real answers.

Looming over all of this was John McCain's original decision to not participate in the first presidential candidates' debate unless a deal was reached on the bailout.

Political grandstanding or statesmanship? You decide.

I'm eager to hear what each candidate has to say, as neither has come out with a very specific take on the bailout plan and the economic situation in general.

Ironically enough, last night's debate was to take place at the Morgan Library and Museum, which is where J. P. Morgan (the man) bailed the country out of the financial panic of 1907 by locking the leading bankers of the day in his library and forcing them to come up with a rescue plan.

What do you think of the bailout plan? Send us your comments by email or join the discussion on our blog, http://www.iconoclast-investor.com and we'll publish them here next week.

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Keep Your Money Safe

The wild fluctuations of the market this year have investors scrambling for what to do with their money. We have a solution: Cabot Benjamin Graham Value Letter. If you want to safely invest your money over the long term, this method is for you. It's how Warren Buffett achieved his billionaire status and how you can protect your investments while still seeing big returns.

Since the 1930s, Benjamin Graham's timeless value investing approach has achieved returns of 20% per year with low risk regardless of the market's ups and downs. Today, Roy applies his system to two models in the Value Letter. Since inception in 1996, Roy's Wise Owl Model has achieved a compound annual return of 16%, and since inception in 2003, Roy's Classic Benjamin Graham Value Model has achieved a compound annual return of 22.4%

Click the link below to start safely investing and earning money the Warren Buffett way.

http://www.cabot.net/info/bgv/bgvir01.aspx?source=wc01

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From Cow Manure to Electricity

To change the subject completely, I want to talk about innovation in the Green sector for a bit. The very first Cabot Wealth Advisory Weekend Digest that I ever wrote was about a New York Times special section called the Business of Green. This week, the Times published another section of the same theme with some more intriguing articles, and I urge you to check it out if you're interested in the Green sector.

The story I wanted to share with you was about how some dairy farms are producing more than just milk and cow manure. Some dairy farms are generating electricity.

Surprising, yes, but that's exactly what's happening in Vermont and other states as people push for more Green energy solutions.

Central Vermont Public Service is one of the first utilities in the country to draw electricity from cow manure on dairy farms. It currently has four farms producing electricity and expects to have two more online before the end of the year.

Residents and businesses that get their electricity from the program will pay four cents per kilowatt hour more than the typical rate of 12.5 cents per kilowatt hour. About 4,000 customers have agreed to participate in the program and pay the extra money, most of which goes back to the farmers who are paying for the equipment needed to convert the methane from the manure into electricity.

The New York Times explains one of these farm conversions this way:

"The Rowells' cows live in a barn where a mechanical scraper sweeps the animals' waste into a large drain. The waste is then pumped into a huge sealed concrete tank known as a digester, which holds 21 days' worth of waste and is kept at a temperature of 101 degrees Fahrenheit. Anaerobic bacteria break down the organic matter in the waste, producing a mix of methane and other gases, known as bio-gas. The gas is burned in an engine that runs an electrical generator.

The cow waste produces 250 to 300 kilowatts of electricity daily, enough to power 300 to 350 homes, according to the utility."

It's pretty amazing stuff and demonstrates the innovative ways people are searching each day for Green solutions to the energy problem. As J. Royden Ward pointed out in yesterday's issue of Cabot Wealth Advisory, there has been no serious attempt to create an energy policy by our government. In this case, the solution likely will not come from the government, but from creative minds of business people, scientists and even farmers.

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Avoid the Headlines, Find the Next Leaders

Don't let the headlines distract you. Michael Cintolo isn't getting sidetracked. Instead he's busy preparing his watch list of stocks for the next bull market. Mike is the analyst and editor of Cabot Market Letter, which has repeatedly brought subscribers the leaders of every bull market since its inception in 1970.

Mike has guided Cabot Market Letter through the recent stock market storm by using Cabot's proprietary market timing indicators. Mike's been advising subscribers to stay largely in cash but he knows the market won't stay down forever. As it turns around, he'll be ready with a great list of future bull market leaders. Past winners include:

Crocs - up 307%
Yahoo! - up 316%
XM Satellite - up 396%
Apple - up 746%
Amazon.com - up 1,290%

Click the link below to get on the right side of the market and to start building your list of future leaders today.

http://www.cabot.net/info/cml/cmlim01.aspx?source=wc01

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Readers' Views on Managing Money

Last week, I wrote about managing your money for the future by preparing, saving and investing. I received several insightful comments from readers and I'll share two of them with you here.

"Figure out how much money you feel you will need and then multiply that number by two.

"Remember to take into account your federal income tax which may be about $25,000 plus your real estate taxes which could run about $500 per month or $6000 per year. That's an extra $31,000.

"I tell my grand kids when they get married there are three simple rules for a happy and successful happy life:

"1. Stay close to God.
2. Invest ten percent.
3. Tithe ten percent.
 
"Try it, it will bring great things in your life."
 
B.

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"I started in banking in 1972, in the south where more people believed in saving than investing. Some of our largest deposit accounts were people that had the discipline to save some of what they earned in every paycheck or just a percentage of what they earned from whatever they did. They did not trust the stock market so they put their money in insured savings accounts only. Sometimes several different banks. They also did not have the option of all of the different investment plans available now and since many of them had grown up during the depression they were very cautious. This could go on forever but my point is they had two of the most important things anyone needs to accumulate wealth. They had a plan and they had discipline and they stuck to their plan. Imagine if their plan had been to invest in the stock market with the same discipline that they used investing in bank savings accounts and certificate of deposits."

G.L.

As always, send us your comments, questions and suggestions!

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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 9/22/08 - The Debt Issue, Part 2

On Monday, Timothy Lutts wrote about his continuing concern for the amount of debt individuals and our country have racked up. He published many insightful reader comments that we received after he first wrote about this topic a couple of weeks ago. Tim also looked forward to the next bull market and a biotech stock that he thinks could be a potential leader. Stock featured in this issue: Sequenom (NSDQ: SQNM).

http://www.cabot.net/Issues/CWA/Archives/2008/09/Debt-Issue-Part-2.aspx

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Cabot Wealth Advisory 9/25/08 - The Big Bear of 2008

On Thursday, Paul Goodwin wrote about the historic events taking place in the stock market and the government's actions in relation to them. Paul advised sticking to a system, such as his SNaC system--Story, Numbers and Chart--which he uses to guide Cabot China & Emerging Markets Repot. Paul also wrote about a company that provides support for pharmas, biotechs and medical device makers that need help with product development, research and clinical trials. Stock featured in this issue: Icon (NSDQ: ICLR).

http://www.cabot.net/Issues/CWA/Archives/2008/09/Big-Bear-of-2008.aspx

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Cabot Wealth Advisory 9/26/08 - Bumps in the Road

On Friday, J. Royden Ward published some letters he received from readers after he wrote about being fed up with inaction in the government to come up with a sound energy plan. Roy also recommended a rock-solid value stock from a company that's been around for more than 200 years. Stock featured in this issue: Colgate-Palmolive (NYSE: CL).

http://www.cabot.net/Issues/CWA/Archives/2008/09/Bumps-in-the-Road.aspx

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Editor's Note: Cabot Green Investor uses our growth-stock picking criteria to select the fastest-growing stocks in the Green sector. This method brought subscribers to Cabot Green Investor a 38% gain in American Superconductor (AMSC) in only a few months. And there's more where that came from. Click the link below to get started today.

http://www.cabot.net/info/cgi/cgiii05.aspx?source=wc01

Until next time,

Elyse Andrews
Editor of Cabot Wealth Advisory

Headline News

Stock Picks

Shopify

Shopify (SHOP), which came public in May of last year, is a new leader.

Facebook

Roy Ward uses the PEG ratio to determine if the stock is undervalued or overvalued.

Amazon.com

For AMZN to be undervalued, the stock would need to fall to 393. 50.

Cabot Wealth Advisory

The Emerging Market Stock You Ought to Own

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Tesla Model 3 vs. Chevy Bolt: Which Affordable Electric Car Is Better?

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Does Alibaba (BABA) Stock Measure Up to Amazon (AMZN)?

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