Cabot Wealth Advisory for 08/2015
The Best Consumer Stocks For Retirees
Retirees should choose consumer sector stocks with well-established brands, reliable earnings, and a history of paying regular dividends. They might not be as exciting as Amazon, but these companies can add a reliable income stream to your portfolio while also providing upside.
Things I Didn't Do Last Week
In general, I think the future is pretty bright. By all measures, the world’s population today is better-nourished, better-educated and less violent than at any time in history. The long-term trends for the world as a whole look good. And if you’re going to be a successful investor, it truly helps to have a long-term perspective—to be able to imagine the possibility of holding onto a stock for ten years or more. Admittedly, that’s hard to do, with the media’s focus on the short term. And in the year ahead it may get even more difficult, as the noise from the current record-setting G.O.P. Presidential field—and indeed, all the election-oriented activity of the next fifteen months—serves as a constant distraction from the task/pleasure of managing your own money.
Apple (AAPL) Changes Character
What do you do when a stock changes character? Specifically, how do you handle it when a stock you’ve known as a growth stock may have turned into an income stock?
Stock Market Seasonality -- August
Back when the U.S. was an agrarian nation, August used to be the best month for the stock market in performance terms. But it lost the lead as the strongest month in 1951, and now, with only about 2% of the country involved in farming, August has taken its place as the worst. So that should just about settle it, right? There’s no point in being invested in stocks in August. So selling in May and going away looks better and better. Not so fast.
All About Dividend Reinvestment Plans
Mutual funds have been around for decades, but it’s been just the last 25 years or so that their popularity has skyrocketed, due in large part to the growing participation in 401(k) retirement plans, which made mutual funds household names. About a decade ago, exchange-traded funds (ETFs) gained traction with individual investors and began to give mutual funds some heavy competition. And in the past few years, they have also emerged as good vehicles in which to park retirement money. But what many investors don’t realize is that there is another vehicle (besides mutual funds), which also offers you a means to pool your money with others to buy shares, at nominal costs.
The Individual vs. The State
But I can’t remember the last time I recommended a European stock. The reason is pretty simple: there are very few European stocks that meet my criteria for investment. Either they’re not traded in the U.S., or the underlying companies are growing too slowly, or their charts are poor. And that’s not surprising. Why? It seems to me that one major reason is our country’s culture, which still values and rewards the rights and efforts of the individual as opposed to the state.
Investing is Not as Complicated as Most People Make It
This simple-works-best approach, even in the cutthroat world of the NFL, struck a real chord with me. For years, I’ve believed in keeping it simple when it comes to investing … which is hard to do these days when you can read so many opinions on TV and the Internet.
From the Conference Floor
This year’s get-together has been particularly lively, as the Cabot analysts present a rich mix of market analysis, investing techniques, stock picks and answers to probing questions from both new attendees and veterans of previous conferences.
Create More Yield with Covered Calls
Cabot Options Trader and Cabot Options Trader Pro subscribers at the Conference asked me about many of their current stock positions on which they do not have options positions. I gave them ideas to create yield as well as hedge.
Inequality, Part II
In last week’s column on the twin topics of The Individual vs. the State and Inequality, I mentioned that beginning in 2017, the SEC will require public companies to disclose the ratio of their CEO’s annual compensation and that of the median employee—and I asked for your opinions on that.
The Uncomfortable Truth About Actively Managed Mutual Funds
For many investors, even the intelligent and well-informed readers of Cabot Wealth Advisory, the biggest decision to be made in their portfolio is whether to put your money into index funds or to make the jump to actively managed funds.
When Cash is Priceless
Yes, cash is the gift that keeps on giving, especially when you have a high percentage of it in your growth portfolio, and most especially when stock markets are (as my mother would say) having a hissy fit.
Four Ratios and Ratings to Increase Your Returns
My value approach seems contrary to the thinking of most investors, but I believe selling when the market is high and buying when the market is low makes sense.
My First Market Crash
Everyone remembers their first market crash. Mine was October 19, 1987, when the Dow fell 508 points (22.6%) in one day. This, of course, was before we all had computers on our desks (and in our pockets) to keep us up to date on what was happening. All we had were telephones—and unanswered questions about how some poorly understood computer-trading programs had allowed this to happen.
Market Shocks (and Aftershocks)
In the stock market, September is usually a time of increased purpose, as the giants of Wall Street return from their summer vacations (after Labor Day), tanned, re-energized and ready to grapple with the market and its challenges.