Daily Posts Archive

Do you believe in experts? I do, although I think you have to choose them very carefully and take their advice with a grain (or a whole shaker-full) of salt. I like the idea that someone who is familiar with the history, dynamics or people of a country, market or conflict stands a better chance of giving good analysis and advice than some random guy on the street. Like most people, if I’m sick, I go looking for a doctor, not the next jogger who comes by. You’d think everyone would believe in experts. Most of us do research before we make an important decision, so why wouldn’t we listen to someone who’s been doing research for months or years?

The recent worries about the economy have led to some weakness in the overall market, especially the commodity stocks. As of mid-day today, the Oil Services Holders (symbol: OIH) is down 21% from its June peak, the Energy Select SPDR (symbol: XLE) is off 22%, and the Market Vectors Agribusiness (MOO) is off 15%. And many individual coal and shipping stocks have been pummeled. To me, though, these stocks aren’t down because of economic fears. Instead, I believe it’s just the “off-the-bottom” phenomenon--that is, when stocks that have fallen 80% or 90% during the past year begin to rally, it can be exciting and fun for a while ... but it rarely persists for longer than a couple of months before things peter out.

Note from Cabot Wealth Advisory Editor Elyse Andrews: Occasionally, we bring you articles from outside sources that we feel you will be interested in and benefit from. Today, we have an article from Carla Pasternak, editor of the High-Yield International newsletter at StreetAuthority about how investing abroad can increase your income. I hope you enjoy it!

Last week, the market told us that investors in medical stocks are afraid that Obama will pull the rug out from under stocks in an attempt to reduce the country’s health care bills. They’re dropping some of these stocks--especially drug stocks and medical device stock--just like they were dropping financial stocks a year ago! But there is one sub-sector of medical stocks that’s still attractive, and that’s the companies that are expected to help rein in those medical costs in the future. One of them is Express Scripts, the company that provides pharmacy benefit management services to managed care organizations.

Instead of writing a regular issue today, I’m bringing you the top four essays from our recent contest, “How I Lost Money in the Bear Market and What I Would Do if I Had Another Chance.” Our thanks to all our readers who submitted entries -- I thoroughly enjoyed reading your reflections.

Taking control of your financial life can be very rewarding, if you’re willing to take the responsibility for your own investments. You can make great strides, and at the very least you won’t be just another passenger on a boat that’s being steered toward the falls by a captain you don’t even know. So, resolve to pay the investment charges and management fees to yourself and steer your own course. If you decide to do this, it takes time and effort. You need to do your homework, and it’s good to have an ally in the process.

Intel was once a superb investment. If you had bought $10,000 of INTC at the end of 1974, the year Craig Barrett joined the company (three years after the IPO) you would have had about $18.5 million at the stock’s peak in 2000 ... or nearly $4 million today.

I’ve discussed the tumult plaguing the newspaper industry several times recently and after today, I’ll let the topic rest unless something noteworthy happens. But first, I want to share a few more of your letters because they express some ideas that haven’t been voiced here before. Thanks to everyone for writing in, I appreciate you taking the time to share your insights with me and your fellow readers. To read all of the past issues I’ve written about the newspaper industry and see how others responded, go to our Web site archives. If you haven’t shared your view yet, you can do so by sending me an email or commenting on our blog.

I bank at one of the larger banking institutions in this country and have kept my account there for a number of years. My loyalty has been tested lately, though, on more than one occasion. My problems, though, are minor compared to bank customers who have over-borrowed and cannot keep up with the required payments on their credit cards, loans, or mortgages. And therein lies the crux of the entire problem. For the past 25 years, consumers have been borrowing too much so they can enjoy the good life. State and local governments have been borrowing too much so they can provide more and more services. And now the U.S. Government is running huge deficits to help prop up a troubled banking system and a sinking economy.

While every investor knows the terms bull market and bear market, every investor seems to have a different definition of each. Some people consider any period of rising prices a bull market. Others require that prices generally rise for a certain time--maybe six months--to be called a bull market. And of course there’s the popular (though highly flawed) view that any 20% move up in an index represents a new bull market, while a 20% decline constitutes a bear market. Adding complexity to these simple phrases is the cyclical versus secular debate. Simply put, a secular bull market is one that supposedly lasts many years or even decades.