Knowing How to Take a Compliment

 

Stock Market Video

Knowing How to Take a Compliment

This Week's Fortune Cookie

In Case You Missed It

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In this week’s Stock Market Video, I remind investors that the general market trend is down, so you should keep your weakest stocks on short leashes. Without a supportive market, these stocks can turn a modest gain into a steep loss if you don’t keep strict stop losses in place. Some stocks to keep on tight leashes are Celgene (CELG), Neurocrine Biosciences (NBIX0 and Martin Marietta Materials (MLM). I also name some stocks that display stamina despite the weak market, including Athenahealth (ATHN), Expedia (EXPE), Pandora (P), Amazon (AMZN) and Royal Caribbean (RCL).

Knowing How to Take a Compliment


It’s always nice to have someone say something nice about you, whether it’s a simple “Nice job!” after a project is completed or an elaborate tribute at a retirement party.

But in the investing industry, some nice words carry more weight than others.

And 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.

On Wednesday, Jeffrey Saut, the Raymond James executive who carries the impressive credentials, cited Cabot Top Ten Trader in his Morning Tack, a daily digest of commentary and market information. In a commentary titled “Sage Advice from the Cabot Letter,” Saut looked at Mike Cintolo’s cautionary advice to follow the market (but avoid anticipating what it might do) and concluded “… we are in total agreement with the must-have Cabot letter.”

I’ve always known that Cabot’s advisories have a following among the denizens of the financial world. I see the names of many brokerages and investment firms in the email addresses of people who send me questions or comments. So it’s not a total surprise that someone would use Mike Cintolo’s take on the market as convincing evidence.

But, as I said, it’s always a nice confirmation to be cited as insightful and necessary.

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My wife and I just finished up a wonderful visit from her brother and his significant other, and we did all the things that visitors from landlocked states (New Mexico, in this case) have to do.

We visited the Nubble Lighthouse, looked at the falls in the middle of Dover, New Hampshire, sat on the beach at Ogunquit, Maine watching the waves and gulls, knocked around Portsmouth for a while and collectively made a pretty fair dent in the Seacoast’s supply of fresh seafood. Nothing was safe: We had lobster (in the rough, in stew and in lobster rolls), salmon, scallops, cod, haddock, clams and shrimp. We would have added octopus or calamari to the list, but I couldn’t get anyone to agree to split an appetizer with me. After dark, when we weren’t at a restaurant, we looked at old family slides (yes, actual slides!) that hadn’t been seen for years and years. Good stuff.

We were very fortunate to get the kind of late-September weather that New England can produce whenever it wants to: sunny enough to show everything off and just at the warm/cool balance that makes a cotton sweater feel good.

If you’ve been reading Cabot Wealth Advisory for a while, you know that when a Cabot analyst starts writing about vacations, kids, politics or the phase of the moon, there’s an investing lesson coming soon.

And you’re right. I’ll make it short.

The weather during this visit was perfect, and we took advantage of it. If it had rained, we would have stayed indoors and watched more slides, and might have broken out a board game to pass the time.

The weather right now in the stock market is total crap. There’s pressure on all kinds of stocks, and it’s hard to find winners that don’t fold up and die within a few weeks.

It’s a good time for the slides and board games, but not the kind of weather that growth investors can plan a picnic in.

So you should do the equivalent of staying indoors, which is to keep a ton of cash on the sidelines and work on your watch list.

And if you have relatives visiting, I hope your weather luck is as good as ours.

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Here’s this week’s Fortune Cookie. Remember, you can always view all previous Fortune Cookies by clicking here and all previous Contrary Opinion buttons by clicking here

fortune cookie"The test of a first-rate intelligence is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function." -- F. Scott Fitzgerald

Tim's Comment: I’ve always loved this quote, because it suggests, elliptically, that it’s good to stay receptive to new ideas, which is a great way to find high-potential new investments. But today I dug around to find the context of the quote, which was a three-part essay, originally published in Esquire in 1936. Titled, The Crack-Up, it describes Fitzgerald’s progression from a young man “able to see that things are hopeless and yet…determined to make them otherwise” to one who is simply, and selfishly, “a writer.” It’s not an uplifting piece, but the writing is brilliant, and if you’re so inclined, you can read it here: The Crack-Up by F. Scott Fitzgerald.

Paul's Comment: Any growth investor knows that it’s possible to be both optimistic and pessimistic at the same time. Whenever the market is going up, I’m convinced that it’s going to go down. And vice versa. When contrary notions get a grip on your brain, it’s always good to have rules that let you “retain the ability to function.” Cabot has rules for all investing styles, and they save my bacon over and over.

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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.

Cabot Wealth Advisory 9/21/15 – The Comfort of Common Goals


I wrote in this issue about the alignment of goals between stockholders and CEOs when the CEO is getting a portion of his compensation in stock. That’s the same kind of alignment that unites Cabot with subscribers. Stock discussed: Facebook (FB).

Cabot Wealth Advisory 9/22/15 – Immigration and Investing


Tim Lutts, Chief Analyst of Cabot Stock of the Month, writes about the challenge of refugees and other immigrants, but sees a distinct upside for the aging countries of Europe in the influx of young people.

Cabot Wealth Advisory 9/24/15 – It’s Hardest to Keep Things Simplest


In this issue, Mike Cintolo, Chief Analyst of Cabot Growth Investor and Cabot Top Ten Trader, writes about his plans for his trip to the lake and warns in the simplest possible terms about the danger of investing when the market is in a bad mood. Stock discussed: Dycom (DY).

Sincerely,

Paul Goodwin
Chief Analyst Cabot China & Emerging Markets Report
And Editor of Cabot Wealth Advisory

 


Paul Goodwin can be found on Google Plus.

Stock Picks

Tesla Motors

If Tesla ever begins to cut back on development and innovation costs, earnings will soar.

Alibaba

China seems to be raising up its very own version of Amazon in Alibaba (BABA.

Facebook

Roy Ward uses the PEG ratio to determine if the stock is undervalued or overvalued.

Cabot Wealth Advisory

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