Buffett's Optimism Proves Prescient
In Case You Missed It
It's March and that means it's time for the NCAA tournament, the gauntlet of games that will eventually crown a school the king of college basketball. (The actual coronation won't take place until April, but the competition is still called March Madness.) So I took last Friday afternoon off and spent the better part of the day watching college hoops. I was particularly interested to see my alma mater, Syracuse University, play and was happy when the team won both of its games last weekend.
Earlier in the week, I had dutifully filled out my bracket on ESPN.com, joining my friends in a group one of them had created. I didn't have high hopes for my bracket, especially since I'm no basketball expert. But I like the spirit of the competition and filling out the bracket makes watching the games even more fun.
However, I woke up Friday morning to find out that I had called all 16 games of the first day of play correct and was in first place in my friends' bracket group. I was also ranked pretty high on ESPN.com's nationwide list of bracket-makers, ranking about 14,000 out of the millions of brackets that had been created.
As the games were played on Friday, Saturday and Sunday my bracket held up quite well. As I write this, I'm ranked #2 among my friends and in the 97th percentile on ESPN.com. And my friends have starting asking me about my basketball team picking strategy, trying to find out how they can duplicate my stellar results.
All I can say is, there's nothing scientific about it--I usually just go with the higher ranked team, especially in the first few rounds of play and then I default to states or schools that I like. For example, my younger brother always wanted to go to the University of Michigan, so I picked that team over Clemson University, even though Michigan was ranked lower. I also picked Western Kentucky (ranked 12) over the University of Illinois (ranked five) because I have a friend who always speaks highly of that area of the country.
I have Syracuse winning the championship over the University of Connecticut, which is a definite possibility. Syracuse won the tournament when I was in college (way back in 2003) when they were a three seed, which is the team's rank this year. I'd also just love to see Syracuse crush UConn like they did in the Big East tournament a few weeks ago, as I'm sure most SU fans would, too.
What does this have to do with the stock market? I'm not going to try to make any predictions about whether it's going to go up or down or sideways because that's not how we practice investing at Cabot. It's fun to make guesses in basketball about which team will trump another, but investing is a very different ball game. At Cabot, we don't make predictions about the stock market. Instead, we watch the market and let it tell us what to do next. The best way to find out what the market is telling us is by having a subscription to Cabot Market Letter, our flagship publication.
Since the last bear market bottom--way back in March 2003, exactly six years ago--the S&P 500 is down 18%, and the Nasdaq has also lost money. But Cabot Market Letter has nearly doubled subscribers' money--up 95%--during this time! Editor Michael Cintolo does it with spot-on market timing, an eye for finding the very best leading stocks, and a set of proven rules and tools. If you'd like to follow Mike's proven program, sign up here.
If you've been to Cabot's Web site recently, you may have noticed a new section smack dab in the middle of the home page: Cabot Headline News. In this area, you'll find two articles compiled from major news sources every weekday. Our goal is try to help you stay better informed about what's happening in the financial world in a more news-oriented way--making Cabot's Web site your one-stop shop for financial information. Be sure to check out the Headline News section on the home page and send us any feedback via email or our blog, http://www.iconoclast-investor.com.
Here's an example of a story I wrote a few weeks ago discussing Warren Buffett's optimism about the resilience of the U.S. economy and stock market. His positive outlook seems to have permeated other investors' thoughts in the last few weeks as the stock market has rallied more than 20% off its March 9 low.
"Warren Buffett, the billionaire investor, said that the economy has "fallen off a cliff," according to CNBC. While Buffett says the economic situation has been "close to the worst case" that he had ever imagined, he thinks the climate would be far worse had the Federal Reserve not stepped in last September.
"Buffett predicted that five years from now, the economy will be much better, with the strength of the U.S. system pulling the country through, just as it has in the past, according to CNBC. Buffett also urged politicians to put aside partisanship when dealing with the economic situation.
"Buffett said that while most banks are in pretty good shape, President Barack Obama should make a "clear statement" in support of the banking system--reassuring people that their money will not be lost if banks fail, CNBC reported.
"Buffett says he still believes (as he stated in a New York Times piece in the fall) that stocks will do better than Treasuries over a 10-year period. But Buffett added that he wasn't calling the bottom of the stock market then and isn't calling it now.
"He also reiterated his optimistic long-term view: "Everything will be all right. We do have the greatest economic machine that man has ever created."
Speaking of Warren Buffett, he's a follower of Benjamin Graham, whose value investing system has handed investors 20% annualized returns for more than 80 years. And now, Editor J. Royden Ward is using this time-tested system to bring investors the best undervalued stocks in the market--and they're selling at bargain prices right now.
If you want to safeguard your money and patiently wait for solid stocks to climb higher in price, Cabot Benjamin Graham Value Letter is for you. Editor J. Royden Ward has even called this a once-in-a-lifetime buying opportunity. Don't wait any longer to get your investments on the right path. Click the link below to get started today.
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, I have links below to each issue.
Cabot Wealth Advisory 3/23/09 - 5 Rules for Successful Growth Investing
On Monday, Timothy Lutts got back to basics and gave you five rules to practice for successful growth investing, complete with the reasons why these rules are important. Tim also wrote about the #1 rule: diversification and why not adhering to this principle hurt those who invested solely with Bernard Madoff. Tim finished by writing about a budget airline that he thinks is a great young growth company. Featured Stock: Allegiant Travel (ALGT).
Cabot Wealth Advisory 3/26/09 - Retire? Maybe You Still Can!
On Thursday, Paul Goodwin wrote about how using Cabot's growth investing style can help you on your path to retirement, no matter your age. Paul gave you a clever list of criteria you can use to determine where you're a stock investor. Paul finished by writing about a Chinese software and IT company that recently broke through resistance. Featured Stock: AsiaInfo Holdings (ASIA).
Until next time,
Editor of Cabot Wealth Advisory
Editor's Note: Don't have time to read multiple investment advisories every month? We can help. Cabot Stock of the Month Report ferrets out the best stock across all sectors each and every month, so you don't have to slog through mountains of information to find the top investment idea. It may be a value stock, Green stock, growth stock, emerging markets stock or momentum stock, but it will always be the best for current market conditions. Cabot Stock of the Month Report gives you exposure to a broad array of sectors and investment styles. Click the link below to get started today.