Rising Internet Use Bodes Well for Baidu

Meet Cabot’s First Employee

A Stock Benefiting from Rising Internet Use

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Today I have a special Question and Answer session with Sheila Frisch, Cabot’s first, and longest tenured, employee, who currently sits in the role of Vice President of Operations. So in honor of Cabot Market Letter’s 40th year in production, here’s a look back at the company through Sheila’s eyes …

Question: How long have you worked at Cabot and what was the subscriber base when you started?

Answer: I began working part-time for Cabot Market Letter as an administrative assistant in September 1975 … 35 years ago.  We had about 350 subscribers then.

Question: What was the company like then?

Answer: I was Carlton Lutts’ first employee, besides his family of course.   The business was operated out of his home on Cabot Farm.  Everything was done manually—subscriber records were on index cards and Elliott stencils.  Back then Carlton picked the stocks, wrote Cabot Market Letter and created the marketing efforts.  There was one telephone (which didn’t ring very often).  The hourly fluctuations of the market were not known.  

How has it changed?

Answer: How hasn’t it changed!  We’ve moved from Cabot Farm to the North Branch Library building a mile up the road; Carlton retired a couple of years ago and Tim has taken over.  We have 11 publications, 20+ employees and state-of-the-art technology to help us all get our jobs done.  Everything moves at a much faster pace.

Question: How did the tradition of coffee time start? Game day? [Each day at Cabot we take a communal break in the middle of the morning and on Thursdays, we play a game during that time!]

Answer: From day one, Carlton insisted we take a break as a group from our daily routine to relax and refuel … or tell a joke or two.   It has always been a great way to connect with and share ideas with co-workers.  We began playing games early on—once there were more than two of us.   

Question: In an age when many people switch jobs often, why have you chosen to stay at one company for so long?

Answer: The work is challenging and I always felt that I made a valuable contribution to the success of the company.  One big plus in working for Cabot is the friendly, supportive, almost family-like atmosphere that Tim carries on today.  I don’t think you find that in many companies now.

Question: How has your role at Cabot evolved since you started working here?

I began as an administrative assistant and have taken on many responsibilities over the years.  The atmosphere at Cabot has always been one of learning and growing.  Educational reimbursement is valuable benefit offered to employees. As a result of this opportunity, I earned a BS in Accounting, which has advanced my career at Cabot.  

Question: What are some of your favorite or most vivid Cabot memories?

Answer: Oh my favorite memories are the fun things we’ve done as a group after reaching a Goal  … from a shopping spree at the Mall to dinner at the Ritz.

Question: What’s your favorite part of your job?

Answer: I enjoy being part of a great, hardworking team.

Question: Any parting words?

Answer: After 35 years, I still enjoy coming to work every day.

Thanks Sheila!


Recently, I read that the number of Internet users will surpass two billion—or about 30% of the world’s population—by the end of 2010. That’s according to a new report by the International Telecommunication Union.

In 2010 alone, there will be 226 million new Internet users, with the majority coming from developed countries. Regionally, 71% of people in developed countries are online, while only 21% of the population in developing countries, many of which are emerging markets, are online. Even more specifically, 65% of Europe is online, 55% of the Americas, 21.9% of Asia/Pacific regions and less than 10% of Africa.

That leaves a lot of room for growth!

And nowhere is that growth more evident than in China, where Baidu (BIDU), that country’s leading search engine, has taken off in 2010.

Baidu was first recommended by Cabot China & Emerging Markets Report in July 2009. This is part of what Editor Paul Goodwin had to say then:

“Baidu is the dominant Chinese-language search engine in China, with a market share that hit 65.8% in 2008. (Google was second with 22% and Chinese rival Sogou was a distant third with 2.9%. Yahoo! was an even more distant fourth.) It is now the third-largest search engine in the world. For a company incorporated in 2000 and limited almost entirely to operations within a single country, this is a remarkable record.

“Baidu has built its towering advantage over its powerful competitors by being both imitative and innovative. The imitative part of the Baidu strategy is its total adoption of Google’s paid keyword search as its revenue model. The company offers most of its services free of charge, and gets 99% of its revenue from online marketing services. Earnings, which turned positive in 2004, have been growing at an astonishing rate.

“Baidu’s future growth is expected to come from the growth of the Internet in China. Despite the controls and restrictions demanded by the Chinese government—mostly aimed at pornography and politically sensitive topics—the Chinese people are taking rapidly to life online. China now has more people online than any other country in the world (221 million in early 2008) and estimates put the growth rate at 18% per year, with a target of 490 million users by 2012. (We note that that’s more Internet users in China than there are people in the U.S.)”

And things have only gotten better since then. Paul’s subscribers bought the stock at a split-adjusted 32 and currently have profits of about 250%! You could buy the stock here and hope for the best, or you could check out Cabot China & Emerging Markets Report, the #1 newsletter for the last five years, for details on what Paul is recommending today.


In this week’s Stock Market Analysis Video, Cabot Top Ten Weekly Editor Michael Cintolo says that the market has tacked on more gains this week and most leading stocks have come through earning season so far in fine shape. Stocks discussed include Las Vegas Sands (LVS), Google (GOOG), Silver Wheaton (SLW) and Coach (COH). Watch the Stock Market Analysis Video.

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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, there are links below to each issue.

Cabot Wealth Advisory 10/25/10 – Is Inflation Inevitable?

On Monday, Timothy Lutts discussed why pondering the possibility of inflation is not going to help you become a better investor. Instead he provided some more relevant indicators to ascertain how a stock will act in the future. Tim also discussed the recent positive action in Netflix and another technology company that’s doing well. Featured stocks: Netflix (NFLX) and Riverbed Technology (RVBD).


Cabot Wealth Advisory 10/28/10 – Recurring Stock Market Leadership

On Thursday, Michael Cintolo discussed how stock market leadership generally doesn’t cross over from one bull market to another … except for right now! This is being caused by a number of factors and has allowed many top companies, like Apple, Netflix and Priceline, to continue growing. Mike also discussed a technology stock that bills itself as the King of Storage. Featured stock: NetApp (NTAP).

Until next time,

Elyse Andrews
Editor of Cabot Wealth Advisory

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