Stock Market Video 3/16/2012

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In this week's Stock Market Video, Cabot China & Emerging Markets Report Editor Paul Goodwin talks about the unsettled nature of the market this week after a good run-up for the first few months of the year. However, Paul also talks about how number of shares doesn't matter, only total exposure does. Featured stocks: Priceline (PCLN), Apple (AAPL), Cummins (CMI), AmBev (ABV), Las Vegas Sands (LVS), Sally Beauty (SBH) and U.S.G. (USG).


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Paul Goodwin Signature

Paul Goodwin

Editor, Cabot China & Emerging Markets Report



[ music ]

>> Hi I'm Paul Goodwin and this is your Cabot Weekly video review. It's been a good week in the market although things are a little bit unsettled. If we take a look here at the S&P 500 what we can see is that we've had a wonderful run-up since the middle of December and then the first few days in March the market did a very sharp correction, went down on you know on fair volume and it got a lot of people got a lot of people very worried and that's exactly what the market needs to do with this kind of shake out. 

It needs to get some people back on their heels a little bit and then as you can see the S&P 500 took off again and this is essentially the case also with the NASDAQ. Take a look here, same kind of short sharp decline and then heads off to new highs. The NASDAQ has now broken up above 3000 so there's just there's no way around it: it's a bull market, you should be putting money to work and you should be finding the best stocks you can to do it. 

I have a one thing I want to just harp on a little bit today and that is we hear a lot here from our subscribers who will recommend a stock and they'll say something like have you got anything cheaper? What they mean is a smaller share price and this doesn't make any sense to us because if you buy you know two shares of Apple and you have $1,000 dollars in the market, or if you buy 100 share of something that costs $10 and you've got $1,000 in the market, either way your exposure is $1,000 so it doesn't make a lot of sense to us but there are people who just somehow seem to think they're getting a bargain in a stock if it costs 10 or think they're getting ripped off if it's 100. That's just not true and I want to show you a few examples here. 

This is Priceline now trading at about 656. This is a weekly chart and you can see I mean a stock that goes up from you know 42 or so in late 2008 to what is it now 656 there's nothing wrong with that. Stocks are going to advance just as easily with high share prices as they can with small. Beautiful kind of slowly declining base here and then takes off and we get an excellent volume cue here as it re-energizes itself. This is a stock that has not re-invented itself but that after taking a significant break is now back on the war path again. 

We could also look at Apple. This is another one that we have we've got a lot of questions about. Look at the monthly chart, it's fairly amazing. Go back to the weekly chart and you can see you know this long run up then you know basing period, another basing period and now it's off again, whether it's the new iPad or whatever. Stock is trading at 587 about and would anybody think that two shares of Apple were worth less then you know a whole bucket load of shares of something that sells for less. 

So I'll go down the price range here a little bit. This is Cummins--makes truck parts that sort of thing, the sort of company that has excellent exposure to a broader economy, which seems to be doing just fine. You know a period of basing here a little decline, a little shake out and then look in the daily chart and you can see that just in the last few days off it goes. You don't expect an industrial stock to necessarily show a lot of agility but this one seems to be doing just fine and at a share price of 127, we'd call this a medium-priced stock. 

We can go to a favorite of mine, AmBev, this is basically a South American beer seller although they also own some Canadian interests and you know not a very quick mover but you see very steady rise base, rise base, rise base and now it's off again. I think this is an excellent way to play the advancing economies of South America. 

Look at Las Vegas Sands. Again long slightly declining base and then off it goes again. This is a company that does gambling Las Vegas Sands and also has Asian interests and the Asian interests have been holding things, have been holding revenues up but now Las Vegas is starting to make a little return all on its own, so at 57 or so medium priced stock. 

Sally Beauty holdings, an almost populist stock from the United States, does retail and wholesale of beauty supplies and this is a beautiful chart, you know heading up just very nicely and look at these three excellent high volume clues saying that there is some pent up buying pressure here. That's selling at about 25. 

There's USG, which is a building supplies company essentially, they make mostly gypsum wall board I think is their biggest product but you know after a long period of housing going nowhere nowhere nowhere and then getting shaken out here, now they're coming back and just look at these nice volume clues here. So top to bottom from you know the 600s all the way down to the teens, the amount of money that you put in is the amount of money you have in no matter how many shares you get so it's a bull market, you should be getting the best advice you can for which you might want to look at and we'll be back again with you next week. Thanks.

[ music ]


Paul Goodwin Paul Goodwin 
Emerging Markets Specialist, Analyst and Editor of Cabot China & Emerging Markets Report

A researcher and writer for over 30 years, Paul Goodwin has been a member of the Cabot investment team and editor of Cabot China & Emerging Markets Report since 2005. Under Paul’s stewardship, Hulbert Financial Digest rated Cabot China & Emerging Markets Report the #1-rated newsletter of 2006 with a 78.6% gain for the year, and the #1-rated newsletter of 2007 with a  74.1% return. Cabot China & Emerging Markets Report was also named 2007 Investment Letter of the Year by Peter Brimelow of MarketWatch

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