Stock Market VideoTime To Look For the “BUY” Button
Vee Get Too Soon Olt Und Too Late Schmart!
In Case You Missed It
In this week's Stock Market Video, Paul Goodwin pointed out the obvious, which is that the market is in an uptrend, telling us that it’s time to be buying great growth stocks. Thursday’s good news from Europe will have to contend with Friday’s jobs report, but that’s unlikely to change the upward momentum of the market. Paul also reviewed the top sectors of this market rally. Stock’s discussed include: Ocwen (OCN), Amgen (AMGN), Lennar (LEN) and Tesoro (TSO). Click below to watch the video!
Time To Look For the “BUY” Button
No matter what you’re doing, someone will be happy to give you free advice about how to do it better, or at least differently. It’s just how we humans do things; we want to help, to pitch in, and also to give other people the benefit of our experience and wisdom.
If you’re lucky, the advice may be a useful maxim like “righty tighty, lefty loosy,” which will keep you from maiming your fingers on an overtightened jar lid or stuck bolt. Or the person in the airline seat next to yours may point out that you’re trying to fasten the wrong seat belt.
If you have been reading what Cabot’s authors write for a while, you’ve probably also gotten plenty of our pithy investment rules. And we have a lot of them.
• Cut Your Losers Short and Let Your Winners Run.
• The Trend Is Your Friend.
• Markets Are Never Wrong; Opinions Are.
• Never Try To Catch A Falling Knife.
• Concern Yourself Least When Others Fear Most (which Tim Lutts used in his CWA on Thursday).
There are plenty more where those came from.
So why are we so fond of these little sayings when there’s so little about them that’s really profound?
The answer is that we often don’t do what we know we should. Sometimes a tennis player will get a great boost from simply being told to keep his eye on the ball. And I know from first-hand experience that a golfer can really benefit from a reminder to keep his head down. These micro-lessons bring us back to our senses, getting us back to doing the right thing again.
Growth investors are exactly the same way. We get nervous and sell too soon or we get stubborn and sell too late. We get greedy and buy too late. We buy stocks with good stories with no fundamentals or stocks with good fundamentals but terrible charts. We miss new bull markets because the last bear hurt our feelings, etc, etc.
Unfortunately, wise sayings are only effective when we are calm enough and receptive enough to hear them. There’s nothing like a good selling panic (or a buying panic, for that matter) to close our ears to wise advice, even if it’s something that we know is true.
Right now, equity markets are in an uptrend. The S&P 500 just hit its highest level since May 2008. Lots of leading stocks are doing very well and there are lots of others that are setting up for new advances.
Despite this positive situation, thousands of investors are just sitting there watching, too worried about Europe/FiscalCliff/Jobs/Chinaslowdown to even think about putting their money at risk in the markets.
So here’s the payoff of this little disquisition about wise sayings: if you want to be successful as a growth investor, you have to be prepared to pull up your big boy pants and do what the rules tell you. Right now, the rules are telling you to get busy and put some money to work.
So what’s the rule for this situation? Well, I can’t think of one that’s exactly right, so I’ll just make one up. Here it is.
Nobody gets paid for not riding the bull.
Here's this week's Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here.
Vee Get Too Soon Olt Und Too Late Schmart!
This saying is far more common these days as, “Too soon old, too late smart,” without the faux-German accent. In any case, it reminds us that experience (and age) bring wisdom.
Tim’s Note: This button (produced fairly recently) is the only button in the collection with an exclamation point. While today's emails are awash in a sea of exclamation points, the messages on these buttons tend to be more serious.
[Editor’s Note: This might be a little discouraging, since it implies that we will only wise up after it’s too late. But, then, I’ve always believed that truly wise people learn not only from their own mistakes, but from studying the mistakes of others. So maybe we can all get smarter in time to do us some good.]
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 9/3/12 — The Market Is a Casino
In this issue, Robin Carpenter, the statistical wizard behind Cabot ETF Investing System, talks about how his love of math led him to his system that’s like a casino, but with the odds on your side. There’s also an interesting math puzzle included!
Cabot Wealth Advisory 9/6/12 — Eight Stupid Rules—Follow-Up
Publisher Tim Lutts uses this issue to discuss the great reactions he got to last week’s “Eight Stupid Rules” commentary. It looks like lawyers are at the top of just about everyone’s gripe list. Stock discussed: Home Depot (HD).
Have a great weekend,
Editor of Cabot Wealth Advisory