How to Get a Fat Portfolio During a Flat Market

 

Stock Market Video 

How to Get a Fat Portfolio During a Flat Market 

This Week's Fortune Cookie

In Case You Missed It

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In this week’s Stock Market Video, Mike Cintolo discusses this week's encouraging snapback in the major indexes and leading growth stocks; after being on the fence early in the week, his trend-following indicators are again bullish. That said, Mike continues to move cautiously due to the narrowness and choppiness of the broad market, but he has his eye on many good-looking set-ups—if these stocks get going, it will provide growth investors with the stocks to dive into and bode well for the market's chances at a year-end rally. Click below to watch the video.

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How to Get a Fat Portfolio During a Flat Market

The biggest story in the market right now isn’t about predictions for Black Friday and the Holiday Shopping Season. Yes, there will be plenty of headlines as retailers begin to dribble out results, with snappy charts and analysis showing how the results compare to long-term averages, to last year’s numbers, to experts’ predictions and how they correlate with employment, consumer confidence and the Baltic Dry Index.

Also, headlines to the contrary, I don’t think the actions (or inactions) of the Federal Reserve Board are the biggest story.

Most people think it’s likely that the Fed will raise rates in December. The market’s antsy actions when it looks like rates will rise are pure uncertainty. We know what the Fed will do, but we don’t know exactly what will happen after that.

No, the biggest story in the market is what’s happening in this monthly chart of the S&P 500 Index that shows performance for the last three years.

And the story is that the S&P, after years of advances dating back to March 2009, has now traded essentially flat for more than a full year.

2,024 on November 5, 2014, and 2,014 on November 12, 2015.

And if you take into account that the S&P has rebounded strongly from its August correction lows, the situation is even more impressively depressing. If you worked backward from the S&P’s low on August 23, you could have extended the flat streak back to early March 2014, a period of over 17 months!

Any way you look at it, whether it’s a year or 17 months, that’s a long time to make zero progress in an Index that captures the performance of about 80% of the total market capitalization of the entire U.S. market.

Yes, it took five years (October 2007 to April 2013) for the S&P to regain the losses it made in the 2007–2008 crash. But anyone subscribed to a Cabot growth advisory would have been heavily in cash during much of that debacle. (I had subscribers to Cabot Emerging Markets Investor 100% in cash for months during that time.)

Our growth investing guru, Mike Cintolo, who remembers market rallies and corrections the way a mother remembers her children’s birthdays, believes that the way the market jumps next might give us a tipoff about what the next major move will be.

I hope he’s right, because this sideways stuff is downright tedious.

But I also want to point out that this kind of up-and-down trading in a range is called a stock picker’s market for a good reason. That because the only way to make money in a market with one foot nailed to the floor is to own stocks that are going up. (And there are always stocks that are going up, even in wretched market.)

If you’d like to learn more about how Cabot growth investing advisories handle the market’s cranky periods and find winners when they’re thin on the ground, you can click here to get all the information your need.

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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: This thought needs no explanation. At the same time, it reveals how far Luther—who married an ex-nun and produced and raised six children with her—diverged from the teachings of the Catholic Church.

Note that the phrase rhymes in the original German, too, not surprising since English has Germanic roots: “Wer nicht liebt Wein, Weib und Gesang, Der bleibt ein Narr sein Leben lang.”

Paul’s comment: My favorite saying in this spirit is: “The day is gone, whether you enjoyed it or not.” So you might as well enjoy it. As we enter the thick of the holiday season, make a special effort to visit family and friends and enjoy a glass of grog (bourbon for me, thanks), and remember that music can sooth the damage from rampant advertising and choppy market conditions.

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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 11/16/15 – My Favorite IPA ... and Three Beer Stocks

Tyler Laundon, the new Chief Analyst of Cabot Small-Cap Confidential, thinks the explosion of craft beers could boost the stocks of can manufacturers. Stocks discussed: Crown Holdings (CCK), Ball (BLL) and Rexam (REXMY)

Cabot Wealth Advisory 11/17/15 – Five Ways to Increase Your Profits and Reduce Your Risk

Tim Lutts, Cabot CEO and Chief Analyst of Cabot Stock of the Month, presents five rules for increasing your profits and reducing your risk. He also introduces a stock that investors are piling into—and that’s pushing the stock price higher. 

Cabot Wealth Advisory 11/19/15 – Apple and Gilead: Great Companies, Bad Stocks

Mike Cintolo, chief analyst of Cabot Growth Investor and Cabot Top Ten Trader, explains why he thinks the stock of two popular big-cap companies’ best days are probably in the past. Stocks discussed: Apple (AAPL), Gilead Science (GILD) and Imperva (IMPV).

Have a great weekend,

Paul Goodwin
Chief Analyst of Cabot Emerging Markets Investor 


Paul Goodwin can be found on Google Plus.

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