Stock Market Video
Taking Charge of Your Retirement
Better Eccentric Vagaries than Commonplace Dullness
In Case You Missed It
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In this week’s Stock Market Video, I talk about the improved health of the stock market. All market-timing indicators are positive, favoring higher exposure to stocks. But some caution signs remain: market leadership has narrowed and defensive stocks are still attracting lots of attention. With lots of issues at or near new highs, I give some tips on how to buy extended stocks and how to recognize sound setups. It is a good time for taking charge of your retirement. Stocks discussed: Netsuite (N), Regeneron Pharmaceuticals (REGN), ServiceNow (NOW), Parexel International (PRXL), Shutterfly (SFLY), Fifth & Pacific (FNP), BE Aerospace (BEAV) and Yahoo (YHOO). Click below to watch the video!
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Taking Charge of Your Retirement
Here’s one of my favorite stories from my time at a large investment house in Boston. I doubt that this will do your investing much good, but it’s definitely worth a smile. This big investment house was founded by a dyed-in-the-wool Yankee whose Boston roots ran deep in the cold soil of Massachusetts. When the decision was made to begin offering the firm’s services to those outside the coterie of Boston Brahmins, a network of brokers were solicited around the U.S. to sell its investment products.
The business remained small for many years, but when it began to build momentum in the 1950s, it was decided that the company should invite the top brokers from all over the U.S. to Boston to meet with the founder and see the operation, sort of an esprit-building junket.
When the group had done the tour and met the founder, they were all invited out to lunch with the Great Man. But instead of piling into taxicabs, the founder took off walking, with the group in tow, and wound up at a small restaurant in Boston’s Financial District. Taking the lead, the founder announced that he was having the 99-cent lunch special, and recommended that they do the same. And finally, while the folks from the marketing department watched with chagrin, he asked that all of these meals be billed on separate checks.
Needless to say, this wasn’t the kind of deluxe treatment the brokers were expecting, but they all fell in line.
When lunch was over, the founder gathered up all of their 99-cent lunch tickets and paid for them himself. He announced to the group that there was a meal tax on any check over one dollar, and that by getting separate checks, he had saved the 3% tax!
The corporate types who were in charge of showing the visitors around were afraid that the founder’s penny pinching would offend the brokers, but that wasn’t what happened. When they returned to their hometowns in the various states, they kept telling the story to their clients and saying, “See, that’s the kind of a man you want to have looking after your investments!”
I don’t know if it would work today, but it showed exactly the kind of character people wanted in their investment professionals in those days. Come to think of it, maybe we still do.
The reality today is that you are being forced to take more and more responsibility for your own investing and retirement planning. Many companies are eliminating or cutting back on their matching program for 401(k) plans. Retirement plans that guarantee an income for life are becoming scarcer all the time. And even Social Security, the Great Untouchable of all government programs, is finding a place in negotiations about spending reductions. Taking charge of your retirement is more important than ever.
And all the while, interest rates are so low that government bonds and savings accounts are just a license to lose ground to inflation.
The bottom line is that if you don’t have a penurious Yankee working hard to save you 3% on your meal tax (and everything else you spend money on), you’d better be prepared (or preparing) to save and grow money on your own. That nest egg isn’t going to hatch itself.
If this seems like too daunting a task, and you don’t know where to start, let me suggest a plan. I don’t like being too predictable, but a Cabot advisory can give you solid, time-tested advice on how to make your money grow. From the low-risk predictability of Cabot Benjamin Graham Value Investor and Cabot ETF Investing System to the faster pace of Cabot Market Letter, Cabot China & Emerging Markets Report and Cabot Small-Cap Confidential, we can get your investment plan rolling, with you in the driver’s seat. That’s no small matter. Click here to get started.
And one more thing. While we won’t buy you a 99-cent lunch, Cabot is inviting readers of Cabot Wealth Advisory and subscribers to our investment advisories to Salem this August to meet our editors, listen to programs chock-full of great investment lore and ask our experts the questions they’ve always wanted answers to. It’s a great opportunity to hone your investing chops while experiencing a historic New England town (witches and all) during vacation season. For more information on Cabot Investors Conference click here.
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Positive April Jobs Reports to Send New Trades Soaring
Employers added a better-than-expected 165,000 jobs in April, and the unemployment rate fell to 7.5% from 7.6%. That’s the lowest since December 2008. More people employed means more consumer demand -- and, ultimately, greater consumer confidence. As a result, our proprietary technical indicators are forecasting yet another huge run-up in our Top 10 trades beginning next week.
One that’s not only similar to the 50% jump we grabbed in Melco Crown and the 44% in Qihoo 360 back in October but also similar to the 46% breakout we saw in Computer Sciences.
If our indicators are on target again as they have been for the past 42 years, this is going to be THE WEEK to trade this market.
Click here to learn how our profits can be yours as well.
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Here’s this week’s Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here.
Better Eccentric Vagaries than Commonplace Dullness
Tim’s Comment: Dickson G. Watts was president of the New York Cotton Exchange from 1878 to 1880, and in his book “Speculation as a Fine Art and Thoughts on Life,” he wrote, “Better the vagaries of eccentricity than commonplace dullness.” True in so many facets of life, it can make you a better investor as well. The common man runs with the herd, buying at tops and selling at bottoms; the eccentric succeeds by doing the opposite.
Paul’s Comment: Auntie Mame (as played by Rosalind Russell in 1958), a woman who knew a thing or two about eccentricity, said, “Life is a banquet, and most poor suckers are starving to death.” I’m not sure many of us could pull off that kind of bigger-than-life style, but finding some way to avoid the crowds can certainly lower your dullness quotient and give you an edge in investing.
The End is Near! We’ve discussed 102 buttons so far, and there are only three more to go. Like this one, the final three buttons are Tim’s favorites, so don’t miss them. But then what? What kind of feature could replace the button? Reply to timothylutts@cabotwealth.com to let us know!
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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.
Cabot Wealth Advisory 4/29/13—Portrait of a Successful Investor
Tim Lutts, editor of Cabot Stock of the Month, writes about a friend of his father’s who is happily following his own rules for investing in small-cap stocks … at age 88! This proves that investing keeps you young, and that, even if his investing rules are a little different, following rules makes for successful investing. Stock discussed: Splunk (SPLK).
Cabot Wealth Advisory 4/30/13—Get a Free Issue of (Almost) Any Cabot Advisory
In this issue, I offered a free issue of almost any of our advisories to anyone who emailed me back. The offer has expired, but we may renew it some time in the future. Stay tuned. Stock discussed: Toyota Motor (TM).
Cabot Wealth Advisory 5/2/13—All About Master Limited Partnerships
Chloe Lutts, editor of Dick Davis Dividend Digest, gives the inside dope on Master Limited Partnerships (MLPs), a source of continuing income. Chloe also sorts out the tax implications of MLPs. Stock discussed: ClearBridge Energy MLP Total Return Fund (CTR).
Have a great weekend,
Paul Goodwin
Editor of Cabot Wealth Advisory
and Cabot China & Emerging Markets Report
