Stock Market Video
Cabot’s Sense of Fair Play
Happiness Is Looking In The Mirror To See Your Boss
In Case You Missed It
In this week’s Stock Market Video, I point out the obvious, which is that we are in a healthy bull market. What's less obvious is that all the people who are trying to figure out what the market will do in the future are pretty much wasting their time. First, they disagree with one another. And second, if you take warnings seriously, you risk missing out on a bull market, which is the most valuable accomplice a growth investor can have. Don't sweat the corrections; move toward being more heavily invested right now, looking for good setups and controlled pullbacks. Stocks discussed in include: Yelp (YELP), Hornbeck Offshore (HOS), Netflix (NFLX), Parexel (PRXL), Toyota Motor (TM), Hertz Global (HTZ), IntercontinentalExchange (ICE) and Equitable Resources (EQT). Click below to watch the video!
Cabot’s Sense of Fair Play
For 42 years, Cabot has been offering education and advice on how to buy and sell stocks. It’s our only business and we take it very seriously. And when we see something that might threaten it, we have to react.
The proliferation of “sponsored” coverage of certain stocks is one such threat. You’ve probably seen them — glossy, multi-page publications featuring stock analysts who are touting one apparently miraculous stock. In glowing language these experts enthuse about the mining stock (or energy stock or whatever kind of stock), usually trading for well under a dollar, that is going to change the world and make you a millionaire.
But buried in the tiny print in the middle of a big block of text at the bottom of a page, there is always a small disclosure telling you that this “expert” has been paid thousands of dollars for this recommendation, sometimes tens of thousands. There will often be a disclosure of stock options tendered as well.
What this means is that the people who paid for the promotional piece (and the people who wrote it) all hold a vault-full of the stock that they purchased at a very low price. And once the pitch does its work and the wave of buying causes the price to pop higher, they will sell at a huge gain.
It’s called a “pump and dump” scheme. And it’s legal. But it also stinks like week-old fish guts, especially because it’s usually total neophytes and non-investors who are taken in by the hype.
And they will likely be burned so badly by the experience that they will never, ever buy another stock.
I can honestly say that I have never seen a company or stock that was pushed by a sponsored piece of this sort achieve any long-lasting gains. Not a single one.
When I see this kind of sponsored mass mailing, I hope the money is sufficient to compensate these hired guns for the loss of their credibility (not to mention their pride), because that’s what publications like this represent. And the more credible the experts, the greater the violation of investors’ trust.
So I want to reiterate our editorial stance and our “Code of Conduct” for all Cabot newsletters.
• We make our living by giving advice to our subscribers. Our advice is not for sale. We don’t accept advertising in our publications and we have not, do not and will not take any money (or anything else) in exchange for our recommendations.
• Our revenue is based on the trust of our subscribers, including those who have just subscribed and those who have been with us for decades. Those who don’t find value in our publications don’t renew them. We value all of our subscribers, but we treasure our long-time subscribers for the trust that their continued patronage represents.
• Our advice is sometimes wrong, that’s part of the investment game. But it will be wrong in accordance with the time-tested rules that we have developed from years of careful study and painful experience. And we will continue to test new ideas and refine the old ones to give the best possible unbiased and unbought advice we can.
So we look forward to serving you for many years to come. And we want you to know that we will never violate your trust by giving you anything other than our independent voice. Thanks again for your business.
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Here’s this week’s Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here.
Happiness Is Looking In The Mirror To See Your Boss
Tim’s Comment: Psychologically, most of us benefit from a feeling of control, from the ability to make choices, from the ability to influence the course of our lives … and being your own boss brings that. Of course, it also brings added responsibility, but if you can handle that, being the boss is miles better than having one.
Paul’s Comment: This is a lovely idea, in the abstract. Lots of people think that being their own boss is the same as not having a boss. Not true. If you are your own boss, you can never get away. That boss is with you during evenings at home, on vacations, even when you go to the bathroom. And a boss like yourself can be pretty darn hard to please.
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.
Stock of the Month honcho Tim Lutts shares his thoughts on why the Boston bombings weren’t prevented and why so few Americans now own stocks. He sees the latter item as a good sign for those who do own stocks. Stock discussed: Prudential (PRU).
I used this issue to remind people that China is still growing fast and creating lots of opportunities for growth investors despite the scary image that many investors still have in their minds. Stocks discussed: Sina.com (SINA).
Roy Ward, editor of Cabot Benjamin Graham Value Investor, makes a case in this issue for the power of Price-to-book-value (P/BV) ratios in identifying undervalued stocks that represent low-risk investment choices. Stock discussed: Core-Mark Holding (CORE).
Have a great weekend,
Editor of Cabot Wealth Advisory
and Cabot China & Emerging Markets Report
P.S. Announcing the Cabot Investors Conference! Salem, Massachusetts, in the Hawthorne Hotel, August 14-16
We will be holding our inaugural Cabot Investors Conference in August, and I hope you will attend. This will be two days of portfolio shifting views and money making ideas. All of Cabot's editors will be there with tips, tricks and stock recommendations that will fill you up with enough "take aways" to change your investing life.
The Conference doesn’t end when I and my fellow speakers step off the stage. I expect some of your most profitable moments to happen “off-hours” during one of the many social activities we have planned. You can rub elbows with the Cabot editors and attendees, maybe even making new friendships along the way.
August in Salem will give you a chance to experience New England at its best ... stunning water views, amazing food discoveries, and some of the finest summer weather anywhere. It's the perfect setting for the investment event of the year. (We were going to call it Stockapalooza, but worried that you might expect music. So, Cabot Investors Conference it is.) Reserve your seat now.