A Stock for Winter
Stock Market Analysis Video
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Last week I discussed 20 investing rules for 2011. If you missed the issue, you can read it here.
This week, I have some rules for you that were sent in by readers. Thanks to everyone who wrote in. If you have some to add, please send them to me by replying to this email. Enjoy!
Love your rules. I like to project the pullbacks on a stock with a long-term growth pattern to identify entry points. I also am not afraid to buy into those pleasing short-term pops of that same stock, especially if it is occurring on low to moderate volume. I know from experience that the next big volume day for that stock seems to be demand driven. In my younger years, I learned the hard way to watch the high fliers very carefully. Don't get me wrong, I got hurt a little during the collapse of the tech bubble, but nowhere near as much as some. Greed never pays … staying on top of those profit situations in volatile stocks is ALWAYS time well spent. Second RULE … never rely solely on broker or analyst opinion … ALWAYS look at the big picture.
After almost 28 years on the retail side of the business, I came to the realization that investors should only be in investments that pay dividends. Consequently I construct portfolios that start with at least 80% dividend-paying investments returning at least 4% in income per year. My overall goal is to achieve between 5 to 7% “real” income annually.
Winter Park, Florida
Here are my rules. They are designed to correct my flaws and therefore are a supplement to many other rules including yours.
HANS’ INVESTMENT LAWS
1—Never look back.
2—You only make money when you sell.
3—Greed kills success.
4—Never rely on investor momentum or on advisors only.
Cheers and happy new year.
King City, Ontario
One of my top rules is “The chart is always right” meaning that no matter what the speculation about the stock, or how good the company might be, if the technical chart is giving you bad signals, the chart is trying to tell you "no new buying here right now.”
Another one of my personal ones goes something like this: “When buying a stock, don't settle. Only buy a stock that meets all your criteria. There are plenty of good stocks out there and you don't have to settle to buy one.”
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With the return of cold weather and snow here in the Northeast, I recently pulled out one of my favorite pairs of winter boots: my trusty UGGs. I’ve long been a fan of the cozy winter footwear and was intrigued when Deckers Outdoor (DECK), the maker of the boots, began popping up in our Cabot newsletters. It recently appeared in Cabot Top Ten Weekly, with Editor Michael Cintolo writing this:
“Markets gained strength in late 2010 from the return of retail, with several apparel and footwear companies showing signs of solid growth. Deckers Outdoor, a California company founded in 1973, has expanded from its roots in Teva sandals and Deckers flip-flops into a stable of global footwear brands. The most visible brand is UGG Australia, the sheepskin-based pull-on boots that have become a staple of young women's footgear. The company also owns the Simple, TSUBO, Ahnu and Mozo brands, but it's the UGGs that drive results, making up nearly 90% of 2009 revenues. Deckers says that its corporate strategy is to take niche brands and turn them into global successes, and it has done that with UGGs and Teva sandals. In a strengthening retail environment, investors are betting that the company will continue to make good on that strategy.
“DECK split 3-for-1 in July 2010, and that marked the middle of a nearly six-month basing period that kept the stock trading sideways in a range between 45 and 55. The big rally began in September, and rocketed the stock from 43 at the end of August to 87 in late December. DECK has been correcting since December 20, and has now dropped to its 25-day moving average. It looks like there should be support at 77, and a small buy here could pay off. Look to average up as the stock gets back in gear, but keep a stop at the 50-day moving average currently at 71.”
You could buy DECK here and hope for the best, or you could subscribe to Cabot Top Ten Weekly to learn Mike’s latest thinking on it and other leading stocks. Learn more here.
In this Week’s Stock Market Analysis Video, Cabot China & Emerging Markets Editor Paul Goodwin says that it's been a good week in the market, as investors come back from the holidays with buying on their minds. He says that investors are optimistic, encouraged by good retail numbers and the fact that hiring may be picking up. Paul also discusses the recent buy signal his newsletter received. Stocks discussed include China Yuchai (CYD) and America Movil (AMX). Click to watch!
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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 1/3/11 – 5 Reasons for Optimism
On Monday, Timothy Lutts discussed five reasons to be optimistic as we start off the new year. Tim also discussed a bet about oil prices between a pessimist and an optimist and why the optimist won. Tim finished by writing about an oil stock to buy now. Featured stock: Oil States International (OIS).
Cabot Wealth Advisory 1/6/11 – Investing New Years’ Resolutions
On Thursday, Michael Cintolo discussed seven investing resolutions that you can use to keep your portfolio on the right track this year. Mike also discussed two stocks in the staffing industry. Featured stocks: Monster Worldwide (MWW) and Korn Ferry (KFY).
Until next time,
Editor of Cabot Wealth Advisory
P.S. Want more ways to connect with Cabot? Follow me on Twitter!