Last week I ran a quiz here, which was designed to give me a better picture of exactly who you--and my other readers--are (in the aggregate). I told you I’d share the results, and here they are. I hope you’ll find it interesting to see who else is reading my Cabot Wealth Advisories!
As a group, 36% of you consider yourself optimists; 60% of you consider yourself realists, and only 4% of you consider yourself pessimists.
You’re not kids. Your most populous age bracket is 61-70, which accounts for 32% of you. Here’s the breakdown:
37% of you are “fully retired,” 13% are “partially retired” and 22% are “preparing for retirement.” Others, presumably, are either too young to worry about retirement or working full steam right to the end.
A satisfying 7% of you are employed in the investment industry.
The main investing goal for 41% of you is “building wealth,” while 9% of you are primarily focused on “preserving wealth,” and 50% are equally focused on both.
A full 43% of you are “moderate growth investors,” 37% are “long term buy-and-hold investors,” 30% are “aggressive growth investors,” 30% are “value-oriented investors” and 24% are “income-oriented investors.” (The total exceeds 100% because you were allowed to choose more than one. The average respondent chose 2.6. )
What you are not is “defensive” or “risk-averse.” Both of those came in at under 4%, a number that I suspect would have been higher six years ago when the market was in shambles.
Also, fewer than 5% of you identify as either “socially responsible investor” or “Christian investor.”
Now we get into politics, a topic I generally avoid in these Wealth Advisories—and here I was surprised. I had long assumed that my audience was roughly balanced politically between people on the left, people on the right, and people in the middle.
After all, a recent Gallup poll tells us that 42% of U.S. voters are registered as Independents, while 31% are Democrats and 25% are Republicans.
But in my survey (again, where respondents could check more than one box), this is what you told me.
A quick look reveals that Republicans and Conservatives are the most numerous respondents.
And if you call everything from Democrat up “left” and everything from Republican down “right,” the distribution is 26% “left,” 22% Independent/Libertarian and 52% “right.”
In other words, among my readers, Conservatives are roughly twice as numerous as Liberals, and Independents/Libertarians are the smallest group of all.
(Alternatively, if you assign Libertarians to the Conservative camp, as some people would do, the dominance of the “right” side grows even larger, and the Independents shrink to 14% of the total—which is a far cry from the 42% of voters registered as such in the U.S.)
My interpretation: People tend to register as Independent voters in part to distance themselves from the shenanigans of the monkeys in Washington, while in this survey, their responses reflected more accurately their values.
And those values, among my readers, skew conservative, for a number of reasons, some certain and some that I can only guess at.
One, obviously, is their age. Drilling into the data reveals that the young respondents to my quiz clearly skew liberal while the oldsters, who outnumber them, skew more conservative.
Another may be the simple fact that saving and investing, as opposed to spending and consuming, involves conserving resources, and this conservative financial behavior aligns more commonly with conservative political behavior.
And another—tell me if I’m going out on a limb here—may be the Cabot style that we’ve evolved over the years. While we try to keep politics out of it, as lovers of great growth companies we can’t help being pro-free-market and pro-business, and those are values espoused by conservatives more than liberals.
Moving on, 18% of respondents said they would consider reading an investment advisory that was in harmony with their political views, while 82% would prefer to keep them separate. Drilling down, I see that the greatest number of respondents who answered in the affirmative on this question identified as Conservative (the largest group, so not a big surprise). But the political group most likely to answer in the affirmative was the Constitutionalists (48%), followed by Tea Partiers (42%) and Libertarians (32%).
Okay. Enough on politics. Feel free to send me your comments if you like (but I can’t promise I’ll publish them).
Circling back to the optimists and pessimists, I found this: The optimists, being quite numerous, were spread all across the spectrums of political identity, but the pessimists (possibly not a large enough group to be statistically valid) skewed to the more conservative political factions. In fact, no one more liberal on the scale than Democrat identified himself as a pessimist.
Note: While I’ve been writing as though these respondents live in the U.S., there’s no certainty of that. Cabot Wealth Advisory readers live in 106 countries, and the odds are high that at least a few residents of Canada (if not more foreign countries) participated in the survey—and I’m glad to have them!
Additional note: The statistical confidence of these results is at least 90%, with a 5% margin of error.
Final note: Many of you wrote comments at the end of the survey, and I want you know that I read them all and I appreciate them all. Thank you!
As to the market, it’s a bull and no one knows where it will end—including me. But one of my primary tenets of investing is that trends tend to last longer and go farther than people expect. So don’t be afraid to buy here.
And if you are afraid, buy something cheap, like a stock from our value investing guru Roy Ward, head analyst of Cabot Benjamin Graham Value Investor.
Roy’s a numbers guy. Nothing he does is flashy or exciting. But he’s got an excellent track record. In fact, over the past 19 years, his Value Model has provided an impressive return of 1,162.3% compared to a return of 589.0% for Warren Buffett’s Berkshire Hathaway. During the same 19-year period, the Dow gained just 254.4%.
How does Roy do it?
Every month, he tracks 44 (!) separate items that size up thousands of companies using four separate sets of factors: QUALITY, VALUE, GROWTH and TECHNICAL.
QUALITY encompasses measures like Current Ratio, Earnings Stability and Price Growth Stability.
VALUE tracks items like P/E ratio, Historical Price/Book Value relative to Current Price/Book Value, and Historical Price/Dividend ratio versus Current Price/Dividend Ratio.
GROWTH looks at things like five- and 10-year Historical Revenue Growth Trends, Quarterly Earnings Acceleration and five-year Projected Cash Flow.
TECHNICAL measures things like Relative Strength, Price Stability and Industry Strength.
And there are 32 more items!
But you don't need to worry about those details, because Roy does all the work and presents the results, telling you in plain English what to buy and why. For every stock, he gives you specific Maximum Buy Prices, as well as Minimum Sell Prices (i.e., target prices), and he updates them in every issue.
The result—emails like this, which he sent to readers just last Monday.
United Therapeutics (UTHR 174.04) reached its Minimum Sell Price of 166.80 today, March 16. The company reported strong fourth-quarter financial results. More recently, the company gained FDA approval for Unituxin, which targets a type of cancer in children. Last year's introduction of Orenitram, which treats pulmonary arterial hypertension, is boosting sales and earnings significantly.
UTHR stock price is reasonably priced at 18.5 times current EPS, but the company reported two quarterly deficits during the past two years. The deficits were caused by extensive share-based compensation to executives and employees. Earnings are expected to grow at a 15% pace during the next five years, but United Therapeutics does not pay a dividend.
United Therapeutics was first recommended in October 2012 at 57.11. The company was featured in the Cabot Value Model using the Modern Value analysis. UTHR has soared 192.1% during the past 29 months compared to a gain of just 41.4% for the Standard & Poor's 500 Index during the same time period. I recommend selling UTHR now.
Your guide to value investing,
J. Royden Ward
Chief Analyst, Cabot Benjamin Graham Value Investor"
If that’s the kind of profit-making email you’d like to receive, your best course is to get on Roy’s list, right here and now.
But if you’d like one more free tip from Roy, I suggest you take a look at Michael Kors (KORS) a former high fashion high-flyer that Roy says is now.
Here’s what he told his readers recently:
“Founded by fashion designer Michael Kors in 1981, Kors has evolved from an American luxury sportswear wholesaler into a global accessories, footwear and apparel company with operations in 95 countries. Accessories, including handbags and small leather goods, account for 80% of total company sales.
Michael Kors targets a broad customer base while retaining a premium luxury image. The company combines stylish elegance and a sporty attitude. The Michael Kors name reflects the ultimate in luxury, with handbags and small leather goods retailing from $500 to $6,000, footwear from $300 to $1,200, and women’s apparel from $400 to $4,000.
Kors is successfully taking market share from competitors in the growing global accessories market. Kors makes fashionable products appealing to a wide range of shoppers and uses a multi-tiered pricing strategy with items to fit every budget. With 84% of total revenue coming from the North America, Kors has extensive possibilities for international expansion. In addition, e-commerce offers huge untapped growth opportunities.
Sales and EPS are expected to surge 21% and 25% respectively during the 12 months ending 12/31/15. However, Kors has exceeded analysts’ forecasts (based on management’s guidance) by a wide margin during the past 12 quarters. I expect Kors to beat sales and earnings estimates during the next four quarters, as well.
Michael Kors continues to spread into other countries and is successfully expanding its product line by offering jewelry, fragrances, eyewear, watches and men’s apparel. In addition, the company is aggressively opening new stores and adding “shop-in-shops” in major department and specialty stores at home and overseas. Kors recently launched its company-owned e-commerce website which generated 73% sales growth in the December quarter. Web sales have offset the slowing trend in retail same-store sales.
KORS shares have dropped 28% during the past nine months and now sell at a very reasonable 15.6 times current EPS. Investors are concerned that growth is slowing in the U.S. However, the company is increasing its Internet sales, expanding its product line and growing rapidly overseas, which will provide exceptional results during the next several years.
The balance sheet is very strong with no debt and lots of cash available to fund growth initiatives. The company is taking advantage of its low stock price by repurchasing $400 million of its stock during the most recent quarter. EPS are forecast to rise 22% per year during the next five years: far better than all other Cabot Value Model stocks. I expect KORS to advance to my Minimum Sell Price of 119.03 within one to two years.”
So, you could just buy KORS here. Trouble is, I haven’t told you Roy’s Maximum Buy Price, and that’s important. If you buy too high, you’re assuming excessive risk. Furthermore, if you simply buy and hold without a guide, you won’t be able to watch as Roy’s Minimum Sell Price changes in response to the company’s earnings reports and other factors.
Yours in pursuit of wisdom and wealth,
Chief Analyst, Cabot Stock of the Month
Publisher, Cabot Wealth Advisory