Stock Market Video
Is the Bull Awake Yet? How About Now?
This Week's Fortune Cookie
In Case You Missed It
In this week’s Stock Market Video, Mike Cintolo talks about a few rays of light he's seen from the market during the past couple of weeks. In fact, an intermediate-term buy signal could be on deck for next week ... if the market thrusts higher from here. Mike remains defensive for now, but he reviews a dozen stocks and sectors he's watching for clues to the market's next big move, and for potential new buys should the bulls take control. Click below to watch the video.
Is the Bull Awake Yet? How About Now?
Lots of people own stocks, but I don’t really think of them as investors. (Note: The most recent numbers I can find say that less than half of all Americans own stocks in any form. But that’s still a lot.) They put money into their 401 (k)s or their IRAs in the same way their grandparents used to put money into a savings account. They follow the recommendations in the little pamphlet that comes with their sign-up documents and buy a little of an S&P 500 index or ETF fund every month.
These people do what they’re told. And if their investment program includes matching funds from their employer, they’re miles ahead of the great mass of people who aren’t saving or investing anything for their retirement.
This kind of passive investment style is certainly easy. You never see the money, so you don’t miss it.
But I can’t help thinking about the people who invested in the S&P 500 in March 2000, just as they were told to, and left it there. Anyone who bought that broad market index just before the Tech Bubble burst would have had to wait for 13 years and three months (until June 2013) to get back to breakeven. That’s a long time to have your money underwater. Clearly, drinking the buy-and-hold kool-aid can be an expensive proposition.
Not to belabor the point, but on Friday as I write this, those who own index funds or ETFs tracking the S&P 500 have achieved zero advance since May 2014. That’s another 21 months of nothing. Just saying.
The people I think of as real investors are those who pay attention, even a little, and take action, even a little. Maybe that’s limited to allocating a little of their retirement account to emerging market equities or high-yield bonds or transferring a little money to cash when things go sour in the market.
Real investing is an active proposition. It involves making decisions and taking risks. And that means that knowing what’s going on in stock markets is important.
Right now, that means that investors are concerned with the return of The Bull.
Only a few sectors of the market have actually entered official bear territory, which is what most call a decline of 20%. The Dow and the S&P 500 fell a maximum of 16.2% and 15.2% respectively from their highs, while the Nasdaq dropped as much as 20%.
Investors, especially growth investors like me, know that a new bull market is an exciting time, ripe with opportunities. There’s a megaton of cash on the sidelines waiting impatiently for the new leaders to identify themselves.
Being the first to know that The Bull is awake and coming down the chute is like being tipped off that tickets to your favorite rock group’s next tour are going on sale … a day before the world finds out.
If you’re among the investors who are waiting for The Bull, congratulations! You’re in the right place. Cabot’s growth advisories are built on knowing what the market is doing. Cabot Growth Investor, Cabot Top Ten Trader and Cabot Emerging Markets Investor are based on knowing the momentum of the market with confidence and responding accordingly.
If you are a subscriber to any of these premium advisories, you will always know whether The Bull is awake and have an explicit guide to what you should be buying, selling and holding.
If you’re not an subscriber, maybe it’s time to get active and avoid those annoying flat stretches in the S&P 500, not to mention the painful wipeouts that occur in bear phases.
Yes, I’ll tell you right here in Cabot Wealth Advisory when The Bull wakes up. But that will be days after subscribers to my Cabot Emerging Markets Investor hear about it. And I’ll be telling them what to buy. It’s time to be an investor. So if you are at all interested in joining them, click here.
Tim’s Comment: Similarly, have nothing in your portfolio that does not serve a purpose. I’ve seen too many portfolios that have a crowd of old losing stocks, often dating back years, in the unfounded hope that they will someday come back. And I’ve seen too many portfolios that are a hodgepodge of improperly diversified stocks, assembled with no rhyme or reason. Every investor should have a system and should follow it.
Paul’s Comment: William Morris was one of the founders of the Arts & Crafts movement, which advocated simplicity and hand-crafted quality instead of Victorian frippery. (He was famous for a while when A&C furniture came back into vogue, although with mid-century modern the new flavor of the month, he’s fading a little.) His quote always reminds me that you shouldn’t have anything in your portfolio without a good reason. If you can’t state the Ruling Reason for holding something, you should clean house.
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.
Small-cap expert Tyler Laundon of Cabot Small-Cap Confidential looks into the virtual reality industry, which is expected to start a multi-year boom phase in 2016. Stocks discussed: GoPro (GPRO), Ambarella (AMBA), Elbit Systems (ESLT), Himax (HIMX) and Kopin (KOPN).
Cabot Benjamin Graham Value Investor’s chief analyst, Roy Ward, writes in this issue about the perilous state of the market and the importance of investing safely. Stocks discussed: Alphabet (GOOG), Amgen (AMGN), Apple (AAPL), CVS Health (CVS), Disney (DIS) and others.
Chloe Lutts Jensen, Chief Analyst of Cabot Dividend Investor, explains how to use “ex-dividend” dates to build a portfolio that delivers monthly dividends for steady retirement income.
Chief Analyst of Cabot Emerging Markets Investor
and Editor of Cabot Wealth Advisory