New Year's Resolutions
Insuring the Future
Because the year and decade is winding to a close, and because I am more than just a studly stock picker (I also have a softer side that comes out around the holidays), here's a poem I put together ... a decade in review. Hope you enjoy!
When we review the decade past,
Since Y2K came storming through,
We see 10 years of trouble, which
Boils still, like a witch's brew.
Truth, the decade's been so rife
With scams and major market troubles
History should face the facts
And call it just "The Age of Bubbles."
Bubble One (The Rise of Tech)
Was bursting at the Decade's birth
With dot.com billionaires brought low
As soaring stocks crashed back to earth.
Bubble Two (The Housing Craze)
Grabbed home investors like a fever.
Buy 'em! Flip 'em! Buy some more!
It's safe--they'll go up forever!
Decade One has also featured
Folks whose greed offends our senses.
Some of them have time to ponder
Behind walls and barbed-wire fences.
Some investors kept on thriving.
'Gainst the odds they were all paid off,
Till the day they saw the perp walk,
Cops escorting Bernie Madoff.
Companies we've known and loved have
Disappeared like mists in summer
Lehman Brothers? Just a memory.
G.M.'s bankrupt? What a bummer!
Bright spots? Sure there were aplenty:
Ugly shoes made Crocs a treasure,
iPod polished up the Apple,
Taser profits shocked with pleasure.
We've swapped Greenspan for Bernanke,
Put in "O" for "W,"
Watched emerging markets rising-
Now what will investors do?
We're as blind as anybody
Can't see through the future's fog.
Yet we know this brand new decade's
Stocks will leave us all agog.
Farewell to the Naughty Noughties.
Welcome the second decade's reign!
We at Cabot wish our readers
Health and Happiness (and Gain!).
Those who rated mortgage bonds
By any mark have dropped a rock.
I hope a wad of worthless bonds
Shows up with coal in their Christmas sock.
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Now for my investing New Year's resolutions:
1) I will not invest in any growth stock if I can't give a one-sentence summary of why I like it. Note: Hearing it mentioned online or on a TV show doesn't count!
2) I will not allow any stock position to hand me a loss greater than 20%. Ever. Note: Knowing when to sell separates the market's victors from its victims.
3) I will clean out my portfolio of any stocks in which I have a big loss. Note: Hope makes a great breakfast, but it's a sorry supper.
In the spirit of the season, it seems fitting to feature a newborn stock, but I'll have to settle for one that's been public for a little more than two years. It's CNinsure (CISG), a fast-growing Chinese insurance company that's riding the growth of the Chinese middle class to excellent gains. CNinsure (the name is probably supposed to mean China Insure) was incorporated in 1999, and had a hard time getting out of the shadow of China Life (LFC). But with a good mix of property, casualty and life insurance, the company is thriving in a country in which people have more and more to protect.
The company's revenues have been growing quickly, up 92% in 2007 and 105 in 2008. After-tax profit margins are also robust, reaching 25.8% in Q3.
Chart-wise, CISG made a big off-the-bottom move, ripping from 7 in May to 25 last September. Since that peak, the stock has been consolidating sideways, and is now trading in a very tight range with support at 20 and resistance at 22. Volume has been generally falling since late October, but the New Year should bring some renewed interest.
And speaking of the New Year, if the idea of the stock market appeals to you, but you don't know where to start, you should take our quick and simple quiz that can help determine which Cabot letter is right for you. Cabot has a family of stock advisory publications that will show you how to invest in any equity style, whether it's growth, value, small-cap, Green, emerging markets, momentum or income.
Even more importantly, if you don't know what these investing styles are, Cabot will help you find out. Take the quiz here: http://www.cabot.net/Subcontent/Which-Publication.aspx
I wish you all Happy Holidays, Merry Christmas, Happy New Year. Take your pick or take all of them. Health, peace and prosperity to everyone!
Editor's Note: Paul Goodwin is the editor of Cabot China & Emerging Markets Report, the #1 newsletter for the last five years, according to Hulbert Financial Digest. Over the long term, our time-proven strategy is beating the market by an incredible 32 times: earning 181% while the market earned just 5.6%. Join Paul's satisfied subscribers today!