Daily Posts Archive

I noticed the following headline last week: “Virgin Atlantic boss warns no airlines will make money this year.” Reading deeper, the writer informs us, “Steve Ridgway said reduced passenger numbers, ‘massive’ pressure to cut prices and high fuel costs will prevent any of the world’s major airlines, including Virgin Atlantic and British Airways, making a profit in the current financial year.” Hmm, now it’s only “major airlines” that won’t make money. Reading further still, we get to Mr. Ridgway’s actual words: “These are some of the toughest times any of us [airline executives] can remember. I would be very surprised if anybody made any money.” That’s different still. So where’s the truth? I took a look at the consensus of Wall Street analysts’ estimates of ALL publicly traded airline companies, and here’s what I found.

We recently received a very interesting proposal from a Cabot Wealth Advisory reader who suggested an essay contest with a subscription to a Cabot newsletter as the prize for the best entry. We have never done such a contest, but the reader had obviously thought through the details, and made a very persuasive case. And we liked the idea so much that we’ve decided to hold the contest! We love competitions and we like the idea of asking Cabot Wealth Advisory readers to share their stories and we think others will enjoy reading them. The entries will give us an opportunity to get to know you better, dear reader. And the winner will have a chance to get back into the market with our best advice because the prize is a FREE one-year subscription to a Cabot newsletter!

In my last issue, I touched on a couple of blast-off indicators, including one that likely triggered a green light a couple of weeks ago when 90% of all NYSE stocks rose above their 10-week moving averages. In addition, the Conference Board’s Consumer Confidence survey came out at 55 this month, a big improvement over 41 last month. But the real story is that the lows in confidence usually occur near major bear market lows. Now, I’m not the type of guy to sit here and call for the Dow to hit such-and-such a level by the end of the year; I just take it one day and one week at a time. But the 90% blast-off indicator, along with the truly historic pessimism among investors and individuals, tells me to expect higher (probably much higher) stock prices in the months and years ahead.

I’m not sure where the term “harder to find than a needle in a haystack” first originated, or why anyone would look there in the first place. But that’s what it must feel like for frustrated investors in search of that rare company unscathed by this vicious economic downturn. So imagine my surprise when I recently uncovered a tenacious little company whose earnings climbed for the 10th straight year in 2008--a whopping +50% increase at that. What if I told you it was actually a savings and loan that specializes in mortgage lending? Sometimes truth is indeed stranger than fiction.

We’re all familiar with the story about the frog. If you drop him in boiling water, he’ll jump right out. But if you put him in cold water and then heat it to boiling, he’ll adjust gradually to the increasing temperature, be lulled into inaction, and die. It’s not true; the frog will eventually jump out. But as a cautionary tale, it reminds us that we should be wary of inaction in response to gradual changes in our environment. In other words, as change happens--and it happens every day--you must adapt. If not, you’ll fail to thrive. So today I want to mention six major changes in our own environments, and discuss how we might adapt to them, and profit from them.

Last weekend, I wrote about the mostly car-free German community of Vauban and I received lots of great responses both by email and on our blog. Thanks to everyone who wrote in, the letters gave me a lot to think about and some even made me laugh. Today, I’m going to share some of those responses with you and I invite you to submit a response of your own if you haven’t yet. If you missed last week’s issue, you can read it on our Web site archives.

The Santa Monica Museum of Art, although I’ve never visited it, has brightened up my week. I read in a recent news story that the museum holds an art sale every year called “incognito.” The idea is simple. Hundreds of artists (over 480 this year) donate paintings, all of them in the same format (8" by 10") and the museum sells them for $300 each, regardless of who painted them. Some of the artists in the sale are quite well known, and their works are worth much, much more than the $300 price. Others are, of course, are worth much less.

We’ve just left behind the biggest, baddest bear market of your lifetime, and we are in the process of leaving behind the greatest economic slowdown since the Great Depression. By no means do I think it will all be peaches and cream from here. But there are great advances happening in medicine, in communications, in alternative energy, and more, and I’m confident that early investors in the right companies will do very, very well.

Imagine a place where no one owns a car and everyone walks, rides their bikes or takes public transportation to work, to the store, to school or anywhere else they need to go. No, this isn’t some Star Trek-like fantasy world, it’s Vauban, Germany, a planned community where cars are largely banned in favor of other modes of transportation. A New York Times article this week detailed the particulars of this forward-thinking community; where a tram runs through the center of town, shops and houses are mixed together so no one has to travel far to do the shopping and people embrace biking and walking as primary means of travel.

Chevron Chairman and CEO David O’Reilly spoke about the need for energy security and alternative energy at the recent Chief Executives’ Club of Boston meeting. So clearly, with even Big Oil conceding the pressing need for alternative energies to be in the mix, the future market for Green technologies is huge. How much does Chevron believe this? It’s now the largest non-public utility producer of geothermal energy in the world and is one of the largest installers of solar panels in the United States. Even Big Oil is going Green.