Stock Market Video
The Best Investing Resolution for 2014
This Week's Fortune Cookie
In Case You Missed It
In this week's Stock Market Video, Mike Cintolo gives some timely advice on how to read the action in late December and early January (hint: expect lots of crosscurrents). But he's seeing more growth stocks, many of which have been consolidating since October, setting up for potential breakouts. Mike also discusses a few stocks he's eyeing for new buying if things go according to plan.
The Best Investing Resolution for 2014
Let me be blunt: New Year's resolutions are mostly a bunch of crap. They're the Chihuahua of your intentions barking at the Great Dane of your habits. They're usually more of a wish that something would happen than a firm resolve to make it happen.
And why is that?
First, change is painful. We do the things we do because our character, our experience and our surroundings push us in a particular direction. And in order to change, we have to step outside ourselves, get off the worn path and leave old habits behind.
But habits have a way of protecting themselves. They're comforting and rewarding in very attractive ways. In a stressful world, our habits offer us easy choices with little or no thinking. And that's leaving out the resentment we feel when (heaven forbid!) someone else (!) suggests that we might benefit from a change. We can even become attached to our bad habits, proud even. After all, they make us who we are!
And since everything we do is connected to everything else, changing one thing often requires changing everything around it. Going to the gym means giving up whatever you were previously using that time for. Taking up carrots as an afternoon snack requires leaving the pleasure of the Snickers bar behind. And on and on.
Plus, of course, your friends are always to drop a little chocolate on your desk when they see you reach for the baggie of veggies. Change (yours) is painful for them too.
An even bigger obstacle to change is that most of us don't know how to keep our resolutions under control once we get started. We're always tempted to shoot for weight loss, plus an exercise program, plus spending less money, and on and on. As long as the change is just on paper, why not shoot for the moon?
My whole point is that actually changing something you do is no walk in the park, even if your resolution is to take more walks in the park.
My solution is simple. First, identify the habit you want to change and the new path you want to take as accurately as possible.
Since writing about growth investing is my thing, I'd suggest a quick review of your results from 2013. Did you buy stocks without enough research? Hold on to your losers too long? Sell out for smaller profits than you might have had? Pay too much attention to talking heads on TV? Own too few stocks, or too many? Or just couldn't pull the trigger on either buys or sells?
Once you know what the one behavior is that you'd like to change in 2014, make your plan.
This next part is important! Be sure that your plan incorporates the smallest possible change that will get you to your goal. If your planned change is going to require you to change who you fundamentally are, it's not likely to happen. The only people who experience major life changes are usually either victims of catastrophes or those who have bottomed out from their bad habits. And you don't want either of those to happen.
So keep it small and keep it simple. Better to take on one small change you can actually stick to than a major life overhaul that will have you back on the couch eating Cheetos in two weeks.
And, not to be too obvious about it, if you want a source for actionable, profitable growth stock recommendations, Cabot has you covered. Click here for details.
Good luck in 2014, whatever changes you decide to make. If you have any topics you'd like me to cover in future Weekend CWAs, I'd love to hear from you.
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Tim's Comment: Humans, like all animals, are creatures of habit, and the older we get, the harder it is to break old habits and form new ones. Yet if you want to become a better investor, that is what you must do. My best suggestion is borrowed from Mike Cintolo. Periodically (year-end is a great time) review your trades of the past period. Determine your most common mistakes and then take steps to minimize them in the future.
Paul's Comment: Albert Einstein was a very smart guy, with a quirky sense of humor. I'm not sure that he really defined insanity this way—it's a big temptation to hook a clever quote to the biggest plausible name, regardless of its correctness—but it has the kind of twinkle that Einstein frequently brought to his public musings. The lesson for investing is obvious, especially as a New Year begins. If you're not getting the results you want, change your methods.
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 Stock of the Month helmsman Tim Lutts writes in this issue about the constant (and contradictory) news about health research. Tim also gives the first of his series of disruptive stock picks. Stock discussed: Spirit Airlines (SAVE).
Mike Cintolo, the man behind Cabot Market Letter, writes about one aspect of tax planning for the New Year, factoring in short-term capital gains taxes to help reduce your total tax liability. Stock discussed: Cabot Oil & Gas (COG).
Our value expert Roy Ward of Cabot Benjamin Graham Value Investor tells us where he sees the market heading in 2014. He also names three more stocks that he thinks are well positioned for solid gains in 2014. Stocks discussed: Ensco (ESV), Lear Corp. (LEA) and Questcor Pharmaceuticals (QCOR).