Cabot Wealth Advisory for 09/2015
Apple vs. Tesla
Back on July 27, in a column titled “Sell Apple,” I told you that Apple, the world’s most loved and most highly valued company, was likely past its point of peak perception. I suggested that even though the company would continue to grow, its stock would suffer as investors slowly sold and went searching for the next Apple. (Precedents include both IBM and Microsoft.) Since that day, of course, the broad market has fallen apart, and it’s enlightening to see how certain stocks have behaved since then.
How to Make Money in Any Market
While none of us claim to be market predictors, we’ve all been investing for many years, and have lived—and profited—through lots of market cycles. Consequently, we’ve learned that money can be made in good and bad markets, and most certainly, during periods of volatility.
Five Questions to Ask Before Buying a Stock
Stock investors (me included) tend to define ourselves by the stocks we buy. The kind of stock market we’ve had recently—one that has fallen and can’t get up, at least not yet—looks very different to different kinds of investors. One practical outcome of this situation is that when I’m contacted by subscribers asking whether the current dip represents a buying opportunity, I have to ask some clarifying questions first.
The Last Thing Growth Investors Need to Hear Now
My contention today is that the last thing a growth investor needs to hear right now is someone predicting which way the market will move next. And the predictors are running wild.
How to Protect Yourself from This Market Now
Market bottoms are a process; they don’t happen overnight. Even if last week turns out to be the market bottom, it’s unlikely the market will go straight up from here—we’re much more likely to see several more weeks or months of volatility, including multiple re-tests of the lows hit in the past two weeks.
All My Thoughts on the Market (plus Cocktails!)
I want to run through all my thoughts on the market: What I’m watching now, some stock and sector ideas that are beginning to show relative strength, the possibilities of a bear market (and what that will entail) and exactly what would turn me bullish in the weeks ahead.
Apple’s new product announcement this week was a big deal. When a company’s market cap is hovering around $640 billion, its gross profit was $70.5 billion in the past year and its stock is held by 2,157 institutional investors, it can’t be anything but a big deal. But for any growth investors out there who have their eye on AAPL, I’ve got to ask, “What the heck are you thinking?”
Why Apple (AAPL) is a Bargain
There’s a war going on! Growth investors are proclaiming that Apple is done, kaput. It’s history. To a value investor, however, Apple shares are an irresistible bargain! Apple sells at a very reasonable 13 times earnings and pays a nice dividend yielding 1.9% annually. Further, Apple’s PEG ratio (current P/E divided by the forecast growth rate) is also very attractive at 0.86.
What About Disney (DIS)
Disney (DIS) is known and generally respected by every American (75% of revenues come from the U.S. and Canada). And its stock is known to every investor. But DIS to me looks ripe for a major fall. Since the 2009 market bottom, the stock has appreciated 494% (and that’s after the recent plunge). In the process, it’s gone from deeply undervalued to overvalued.
Traders' Take on The Fed Meeting
The top hedge fund managers in the world are as confused about the stock and bond markets as the rest of us. So what do they, and we, do in times like this? Tread very carefully. Don't force trades just to have some "action." Similarly, don't be in a rush to buy the dip or sell the rip.
What the Fed Did, What the Market Did, and What It All Means
The bottom line is that the Fed sat on its hands after its Thursday meeting, leaving interest rates in the 0%–0.25% range they have occupied for seven years, give or take. The one item from the Fed’s announcement of its delay that has captured investors’ attention is the expression that came after reassurances that risks to the U.S. economic activity and the labor market are “nearly balanced” But the sentence went on to say that the Fed “is monitoring developments abroad.”
The Comfort of Common Goals
I don’t have any historical data, but I know that the practice of senior corporate executives getting part of their compensation in company stock has been around for a long time.
Immigration and Investing
England has been changing, and rapidly. In recent decades, it’s absorbed hundreds of thousands of immigrants from India, Poland, Pakistan and China (to name the top four). It’s now the third most crowded nation in Europe, after the Netherlands and Belgium.
It's Hardest to Keep Things Simplest
This “focus on the simple” brings me to one of my favorite sayings in the stock market, which I got from the book, The Perfect Speculator (I highly recommend it): “It’s hardest to keep things simplest.”
Knowing How to Take a Compliment
When a testimonial comes from a Managing Director and Chief Investment Strategist at investment giant Raymond James & Associates, we’re quite pleased about it. After all, a company that has over $500 billion in total client assets probably got big by being smart.
Making a List ...
One of the basic industries that has recently caught my interest is infrastructure, particularly water infrastructure in the U.S.
Apple Car Vs. Tesla
How will the electric utilities—and the solar energy-producing homeowners—evolve to serve this fleet of electric cars? And ultimately—when will I be able to summon an autonomous car with my smartphone, tell it to take me to my destination, and exit the vehicle upon arrival, all without dealing with a human? The answers to these questions are still unknown, which means there’s a lot of opportunity in this market, and that’s one reason the readers of my Cabot Stock of the Month are still holding onto Tesla, with profits exceeding 750%.