Stock Market Video
Making Money Work
Consideration Is The Sign Of Wisdom
In Case You Missed It
---In this week’s Stock Market Video, Mike Cintolo talks about the bullish general market, not just from the action of the major indexes, but the rotation out of many defensive stocks and into growth-oriented names during the past few weeks. It's not a time to buy 10 new stocks all at once, but there are plenty of opportunities for making money work emerging every day or two. Stocks mentioned include Netflix (NFLX), Nationstar Mortgage (NSM), Ocwen Financial (OCN), EQT Corp. (EQT) and Tesla Motors (TSLA).
Making Money Work
So what the heck kind of investor are you anyway?
If you’re like most investors I know (and I know quite a few), you probably believe in the value of work. That means that you have built the principle that there’s no such thing as a free lunch into the foundation of your life. Investors may talk about “playing” the market, but they know that investing is really work. The market has a way of teaching people who don’t put in the time and effort: It takes their money.
Work creates value; it turns commodities into products and products into companies. Work also turns ideas into realities and helps to create new realities.
Personally, I’ve worked all my life (except for brief periods when I was “at liberty,” as actors used to say). I’ve done everything from being a fry cook and planting trees to driving busses, delivering building supplies and conducting phone surveys. I’ve been a paid political speechwriter and a traffic analyst for an intelligence agency. I think work is a good thing, even if there were a few jobs I was glad to see the backside of.
But the uncomfortable truth about work is that it’s … well, it’s work! Work requires effort, even if you enjoy it. Lots of people get the Sunday-Night Blues because they have to be back in the shop on Monday. We all make bad jokes about disliking it: “Hard work never killed anyone, but I’d rather not take a chance” and “Work fascinates me. I can sit and watch it for hours.” And we fantasize about what we’d do if we hit the lottery.
But the truth is that a lot of people who require themselves to work hard don’t impose the same requirement on their money; they are not making money work. They just put their money into a savings account or government bonds. And these days, that’s the same as letting your money live the laziest, most unproductive kind of life you can imagine. Because savings accounts and Treasuries aren’t working!
The most recent Gallup poll on stock ownership tells us that just 52% of adults in the U.S. actually own stocks, either directly or through mutual funds, 401(k)s or IRAs. That’s the lowest this figure has been since Gallup started asking about it back in 1999.
Meanwhile, the stock market has been on a tear, making a ton of money for the people who’ve been investing in stocks.
This is frustrating for me, personally, because I (and my Cabot colleagues) know what to tell people about how to make money in the stock market. That’s all we do. And we’re good at it.
And we also know that a bull market is a huge opportunity. Bull markets aren’t exactly rare, but we’ve been through some pretty bull-deprived stretches in the past decade. The presence of a bull market is the single best predictor of stock market success. It makes investors feel smart and puts money in their pockets.
But if all you’re doing is saving for the future, you (and your money) just aren’t working hard enough. Money only works when it’s invested. And saving isn’t investing.
If you aren’t putting your money to work, you’re just floating along on a little boat that’s up a creek without a paddle. And you’re at the mercy of every sandbar, boulder, waterfall and backwater along the way.
Want to get that boat moving? A subscription to Cabot Market Letter will have you enjoying this bull market immediately!
Here’s this week’s Contrary Opinion Button.
Remember, you can always view all of the buttons by clicking here.
Consideration Is The Sign Of Wisdom
Tim’s Comment: Consideration, in its most basic form, means simply the act of careful thought, reflection and deliberation, exactly what you would want from a Supreme Court Justice. If consideration leads to wisdom, wisdom can lead to successful investments.
Paul’s Comment: One of my favorite sayings is: “It is well to remember that, with one insignificant exception, the universe is entirely populated by others.” I have no source for that quote, but I think it’s a good one. Consideration springs from recognizing your place in the universe.
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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.
Tim Lutts, editor of Cabot Stock of the Month, looks for signs that the market is overvalued, but finds mostly signs that it’s heating up. That’s enough to push Roy Ward, editor of Cabot Benjamin Graham Value Investor, to reduce his equity exposure, but it doesn’t mean there’s going to be a big correction. Stock discussed: Amazon.com (AMZN).
Cabot Options Trader’s editor Jacob Mintz writes about three options strategies you can use to hedge positions in your portfolio, These options—covered calls, put purchases and risk reversals—can generate income and protect against volatility.
Mike Cintolo, editor of Cabot Top Ten Trader, writes in this issue about the advantages of radically simplifying your investment system, keeping only a few rules and tools that work and ignoring most predictions about the future. Stock discussed: Hertz (HTZ).
Have a great weekend,
Editor of Cabot Wealth Advisory
and Cabot China & Emerging Markets Report