Daily Posts Archive

You’re living through a historic stock market event, one that will be dissected in texts and articles for as long as people study the market. Congratulations! If your grandchildren ever get interested in the stock market and its history, you have a first-class, first-hand war story to tell them. It’s a tale of greed and fear--the constant poles of stock market emotion--plus a clash of opinions about the proper role of government in the market. It’s a classic case of good news and bad news, and there’s been plenty of each.

Two weeks ago I wrote here about the massive buildup of both government and individual debt in last 70 years. I noted that this bubble of debt appeared to have popped in the past year. And I speculated that a very long (decades-long) period of debt shrinkage and balance sheet improvement might be in the cards. Then I asked for your opinions.

One question we’ve gotten a few times from readers is “I’m new to investing. How do I get started managing my money for the future?” It’s a basic question, and you’ll find answers all over the Internet, but ours has a little twist. Today’s Cabot Wealth Advisory will attempt to answer that question, so if you’re just starting out or if you want to take the time to regroup, especially in light of the recent market decline, this issue is for you. It’s never too late to start preparing, saving and investing for your future.

My stock idea is, very simply, the #1 stock on my watch list right now. The company sports most of the characteristics of past leaders--fast sales and earnings growth, healthy profit margins, a unique position in a mass market, and a huge opportunity for growth going forward.

History in the making! Granted, it’s not the kind of history we’d all like to see, but the fact remains that the upheaval in the financial world during the past few days--in stocks, bonds, currencies, and, oh yeah, in the real world as well--is going in the history books. We’ll be reading about this stuff for years to come. As always, we want to keep you in gear with our latest thoughts, so I decided to jot down a few quick notes about what I see--call it a stream of consciousness.

Proposals to use lampposts with wind turbines and to build a windfarm in Texas are propelling the alternative energy industry forward. China is aiming to use more wind energy by 2020 and oil is hovering around $100, which means there are more opportunities for companies in the alternative energy sector.

Cabot Small-Cap Confidential, a limited subscription newsletter, is one of our newest publications, launched just one year ago. Its focus is on finding undervalued and little-known small-cap companies that are poised to break out in a big way. The number one request Cabot has had over the years has been to find great stocks sooner and with Cabot Small-Cap Confidential, we’re able to do that.

I receive a lot of email questions from Cabot Wealth Advisory and Cabot Benjamin Graham Value Letter subscribers. I learn something from every email you send me--either from your remarkable knowledge or from the research that I conduct to formulate a deserving answer. Recently, I received the following thought-provoking questions.

In my mind, just as the failure of the sub-prime market triggered the collapse of the housing industry, the collapse of the housing industry will trigger the deflation of our debt bubble. Eventually, if all goes well, the end result will be a smaller debt load for the U.S. and a smaller debt load for American consumers as well ... which in my mind means living in houses we can afford.

Forecasting complex events is impossible. Investing on the basis of anyone’s forecast is dicey. You’re an individual investor and the one advantage you have over institutional behemoths is your ability to jump in or out of a position quickly. If you give up your agility, your edge is gone, and you’re at the mercy of the fearless predictors. I wouldn’t do that if I were you.