Spending Your Country to Prosperity?
In Case You Missed It
In this week’s Stock Market Video, I talk about the market’s fragile buy signal and why it’s okay to do a little selective buying but not to jump into the deep end. It’s a sharpshooter’s market and confining your buying to the strongest names will pay off in such a volatile environment. I also run through a few of my favorites among name-brand stocks with heavy trading and excellent charts.
Spending Your Country to Prosperity?
I’m going to keep this short, because I know many of you are will be reading it quickly during a momentary break from your all-out, take-no-prisoners assault on both the Internet sales and the brick-and-mortar venues within your range of fire.
First, I want to thank you for all you’ve bought so far. Retailers all over the world are depending on you to stoke the boilers of the global economy. Those hopeful headlines tracking the hourly progress of holiday sales couldn’t be written without your efforts.
And, just in case you’re worrying that you’re carrying the world’s economy on your back (and your credit card), you can be comforted that Chinese consumers are learning fast about the joys of consumer capitalism.
On November 11, Chinese consumers spent an astounding $14.3 billion on Singles Day, a number that dwarfs the Black Friday to Cyber Monday shopping binge in the U.S. The founders of the Day thought that the date 11/11 looked like trees with no branches and Singles Day began as an ironic way for unmarried and unattached people to give themselves a present (because there was nobody else to give them one).
Yes, it’s a manufactured holiday that Alibaba, the Chinese online commerce giant, has pumped up into a genuine cultural phenomenon, with visits from Daniel Craig (the current James Bond) and other celebrities. But it wasn’t so long ago that Black Friday was just an ironic excuse for bored family members to escape the post-Thanksgiving/football hangover and track down some bargains. (I seem to recall that Wal-Mart played a large part in amping up that craze.)
China has been working hard for a couple of years now to shift its economy from an exporting base to a consuming base. National economies that run on consumption are more stable and less dependent on the health of the global economy, both of which are goals of the Chinese regime.
Unfortunately for China, the method it used to try to pump money into its nascent consumer economy was an engineered stock market bubble. And when that bubble burst in June and kept deflating through August, the setback was substantial.
Encouraging your citizens to buy their way to national prosperity is a perilous project. (We even tried it here in the U.S. when the government sent $300 each to most U.S. taxpayers as part of the Economic Stimulus Act of 2008.)
I know all readers of Cabot Wealth Advisory are prudent, fiscally savvy consumers. That’s why I’m not issuing any warnings about trying to spend yourself rich during the holiday shopping season.
My point is that you might be better served in the long run by buying Amazon (AMZN) than buying something from Amazon. When the world is in a buying mood, owning the retailers can be a better financial strategy than buying a new TV from them.
And if you want to be sure you’re buying the right retailer (or any growth stock for that matter), you can always count on Cabot Growth Investor to steer you right, and Cabot Emerging Markets Investor to give you the unadulterated facts about China and the rest of the developing world. A quick click here will connect you with the smartest purchase you make in 2015.
And personally, I’ll spend Black Friday in my usual traffic-avoidance mode, home with a book. At least that’s the plan.
I hope you had a great Thanksgiving and that you get exactly the amount of shopping that makes you happiest. Happy hunting!
Here's this week's Fortune Cookie. Remember, you can always view all previous Fortune Cookies here and Contrary Opinion buttons here.
Tim’s comment: It’s not every day that one finds parallels between the army and the people who make up the stock market, but this much I know: whenever everyone is thinking one way in the market, it will soon pay to think differently. Contrary thinking pays.
Paul’s comment: I think the best definition of a mob is a group of people who are all thinking exactly alike. And we all know what a mob can do (thinking only in the crudest sense of the word). And when the mob is focused on buying (or selling) stocks, it’s best to stand off to one side and watch.
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.
Roy Ward, Chief Analyst of Cabot Benjamin Graham Value Investor, explains why his value model has beaten Warren Buffett’s results since 1996. Roy also discusses two undervalued stocks he thinks Warren should buy. Stocks discussed: Johnson Controls (JCI) and Whirlpool (WHR).
In this issue, Tim Lutts, Chief Analyst of Cabot Stock of the Month writes about the life cycles of companies and their stocks. Tim makes the point that dividend investors don’t have to give up growth to get income. Stocks discussed: Maiden Holdings (MHLD) and UnitedHealth Group (UNH).
I write in this issue about why it’s easier for an optimist to give thanks than it is for a pessimist. I also run down my own personal list of candidates for thanks and give one seasonally appropriate stock recommendation. Stock discussed: Tyson Foods (TSN).
Have a great weekend,
Chief Analyst of Cabot Emerging Markets Investor and
Editor of Cabot Wealth Advisory
P.S. Don't forget to reserve your copy of Cabot's 10 Favorite Low Priced Stocks for 2016. This perennial favorite is all new for 2016, and will give you 10 little-known stocks that have the potential for big, quick gains as the calendar flips (as well as a few that usually trend well into the New Year).