The publication that would become Cabot China & Emerging Markets Report was first published in March 2004 under the name Cabot’s China Investor. The editors at Cabot saw the huge growth potential in China and it has paid off in the years since. In 2006, the name was changed to Cabot China & Emerging Markets Report and the publication expanded its focus to include other strong emerging markets.
Chief analyst Paul Goodwin came to Cabot in 2005 after spending 30 years as a writer and researcher. Prior to joining Cabot, Paul was a senior financial writer for Putnam Investments’ international and institutional communications, professor at the University of New Hampshire and a Chinese linguist for the U.S. Army Security Agency. Paul has appeared on TV numerous times as a financial analyst.
Cabot China & Emerging Markets Report focuses on the emerging markets economies, with special attention paid to the BRIC (Brazil, Russia, India and China) investment landscape. With a subscription, you’ll discover the value of international diversification and the profit potential of investing in countries whose economies are growing far faster than that of the U.S. All of these stocks are traded on U.S. exchanges as American Depositary Receipts. The stocks are selected for both their fundamental and technical characteristics, but sold mainly for technical reasons.
The Report is perfect for growth investors seeking diversification. There is greater risk involved with many of these stocks, but the rewards are greater as well. Investors who prefer stocks that offer huge potential in rapidly growing areas would benefit greatly from this advisory.
In part because of the enormous growth seen in the BRIC countries emerging markets, Paul brought investors returns of 78.6% in 2006 and 74.1% in 2007, making Cabot China & Emerging Markets Report the #1 newsletter, according to CBS MarketWatch and Hulbert Financial Digest. Established in 1979, Hulbert Financial Digest is an independent and impartial rating service that tracks the performance of more than 500 portfolios in 180 stock and mutual fund investment newsletters.
Paul has maintained his #1 ranking for the 12 months ended May 31, with a gain of 108.7% He’s accomplished this, despite the bear market earlier this year, by sticking to his strict stock selection method and market timing indicator, both of which are detailed below.
The stocks in Cabot China & Emerging Markets Report are selected using Paul’s SNaC method, which he has written about previously in this space. To review, SNaC stands for Story, Numbers and Chart, and a stock must have be positive in all three categories to be chosen.
Story includes the basic market proposition of a company, including its products, its target consumers, its potential for huge sales growth, its barriers to entry, its competition, its intellectual property, its management and all the other stuff that you can put into words. Story is an attractive way to look at stocks because we’re all trained to react to stories. But there are lots of stocks with great stories that don’t do a thing.
Good numbers, which are a factual record of a company’s (and thus, management’s) success, are also very important. Paul looks for stocks that have been growing revenues and earnings for a number of quarters, ideally with earnings (profits) rising faster than revenues (sales). It’s also nice to have an increasing number of institutional investors and an after-tax profit margin that’s high and rising. And finally, Paul wants a stock that’s liquid, trading at 400,000 shares a day or more.
Numbers can be comforting because they give you a sense that more and more consumers and businesses are buying a company’s products, and that management knows how to grow profits. Plus, it’s a fact that most of history’s greatest growth stock winners had huge numbers before they catapulted higher.
Charts are where the rubber meets the road in growth stock investing. When Paul screens his emerging markets investment universe for candidates to recommend, he’s looking for stocks that are in demand. And that’s what a chart can tell you. Charts also tell you about a stock’s momentum-whether its rate of appreciation is rising or falling, whether it’s shaping itself into any of the classic patterns of consolidation, reversal or base building.
Having all three factors—Story, Numbers and Chart-can help to shift the odds in favor of a stock’s success. The best stocks have great stories, strong numbers and technically attractive charts.
Cabot China & Emerging Markets Report aims at the construction of a 10-stock portfolio. When the Report has 10 stocks, it is considered fully invested. The portfolio is aggressive in its size, large enough to withstand a failure but small enough to feel the benefits of a winner.
Stocks are held for varying lengths of time in Cabot China & Emerging Markets Report. Because these stocks are usually moving up quickly, they are often held for shorter periods of time, anywhere from a few weeks to a few months. The Report will tell you when to buy and when to sell, so you never have to guess.
A big part of deciding when to buy and sell is dependent on the market. The Report has its own market timing system that uses a trend following indicator, which keeps the Report and its subscribers on the right side of the market.
Each bi-weekly issue of Cabot China & Emerging Markets Report has market commentary that seeks to educate readers about current market conditions and often includes investing lessons. At Cabot, we believe that an educated investor is a better investor and we aim to help you learn as you invest. Each issue also includes stock recommendations, market timing and updates in previously recommended stocks.
A subscription also includes updates every other week, email access to the editor, access to a password-protected Web site and timely email alerts when necessary, such as for selling a stock or changes in the market timing indicators.
The enormous gains and commitment to a strict system led the Specialized Information Publishers Foundation to award Paul first place for Best Financial Advisory Product and the 2008 Editorial Excellence Award.