We should be able to add to our total return of 124.9% at the end of this week as our GDX and DKNG positions are due to expire. The jump in our total return should be notable as we have the potential to add 17.1% through our DKNG position and 1.6% in GDX.

I plan to add one more position next week so stay tuned for a trade alert, possibly two as we move through the week.

Despite some under-the-surface concerns, it was another strong week for the market as the S&P 500 gained 1.5%, the Dow was mostly unchanged and the Nasdaq added 1%.

Despite some under-the-surface concerns, it was another strong week for the market as the S&P 500 gained 1.5%, the Dow was mostly unchanged and the Nasdaq added 1%.

We made our fourth straight successful trade for this earnings cycle late last week. We were thankful to take quick profits in Amgen (AMGN) Wednesday morning. All went as planned as AMGN opened well within the chosen range of our iron condor and, as a result, we were able to take off the trade for a nice one-day gain of 5.6%. Our total return for this earnings cycle stands at 28.8%, one of our best performing earnings cycle since we initiated Earnings Trader back in mid-July 2022, smack dab in the middle of the most recent bear market.

The market’s primary evidence remains in good shape, and that’s especially true for leading growth stocks continue to act very well, and after two-plus years in the wilderness, we’re optimistic that the best names can continue to do well. That said, near-term, risks are rising for some sort of change in character (pullback, rotation, etc.) as there’s a growing divergence and some of the action out there is frothy. Because of that, we’re mostly riding our winners, but we sold a couple of laggards earlier this week and--for now--are holding about 30% in cash.

All that said, stay tuned: We could put some money back to work in the days ahead as earnings season continues to roll on, but for now, we’ll stay a bit closer to shore than we have been and see how things play out.

The markets have continued their bullish momentum so far in 2024, with growth stocks continuing to lead the way—especially large caps, which are up 32.94% so far this year.

Sector-wise, Communication Services (up 9.74%), Technology (up 5.07%), and Healthcare (up 4.11%) are the winners so far, with Real Estate (down 4.37%), Utilities (-2.91%), and Consumer Discretionary (-0/83%) the losing sectors.

Housing inventory is still tight, with prices remaining a little lofty. The S&P Case-Shiller home price index came in at a 5.4% rise, which was a bit less than the 5.7% forecast, but still higher than the month before.

Despite some worries early in the week, the bulls once again bought the dip, and pushed the indexes near all-time highs. For the week, the S&P 500 and Dow gained approximately 1.35%, and the Nasdaq rallied 1.7%.

Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the February 2024 issue.

Spin-offs should be in every value investor’s toolkit. In this issue, we are adding a spin-off, Worthington Enterprises (WOR), to our Buy recommendations roster.

We comment on recent earnings from Comcast (CMCSA) and provide updates on our other recommended stocks.

Please feel free to send me your questions and comments. This newsletter is written for you and the best way to get more out of the letter is to let me know what you are looking for.

The primary evidence remains bullish, so we’re still thinking mostly positive, especially when looking at the big picture. But there’s no question things are getting more and more divergent: The broad market and even most big-cap stocks are flat to down so far this year, and more recently, as interest rates have backed up and financial stocks get hit, we’re seeing selling pressures start to spread. That doesn’t necessarily portend doom, but coming on the heels of a multi-month advance, this kind of action does raise the risk of a change in character; we’re going to pull our Market Monitor down a notch to level 7—still bullish, but holding a little cash, booking some partial profits on the way up and being more discerning on the buy side makes sense.

This week’s list has its share of hot stocks, and we’re impressed that we’re still seeing some strong earnings winners that are moving on very, very strong volume. For our Top Pick, we’ll go outside the tech space with a name that just lifted out of a multi-month base on earnings and could be leading a new group move. Try to buy on dips.

The major indexes are up to new highs, though they again have become very dependent on the Magnificent Seven in the last month after stocks of virtually all sizes and sectors rallied in November and December. Outside the Mag Seven, most stocks have been stagnant so far in 2024. Not so in the Stock of the Week portfolio, where we have multiple stocks hitting new highs, none of which belong to the Mag Seven, and TWO stocks that have doubled in the last year! We try and keep the hot streak going by adding a familiar, big-name growth stock that was beaten to a pulp during the bear market of 2022 and 2023 but has demonstrated some real momentum in the last three months. It’s a recent recommendation from Cabot Explorer Chief Analyst Carl Delfeld.

We made our third straight successful trade for this earnings cycle late last week. We were thankful to take quick profits in Microsoft (MSFT) Wednesday morning. All went as planned as MSFT opened well within the chosen range of our iron condor and, as a result, we were able to take off the trade for a nice one-day gain of 11.1%. Our total return for this earnings cycle stands at 23.2%.

Not much to say this week. The plan remains simple. I continue to focus on balancing out the overall deltas of our current positions by adding a trade, most likely a bull put spread. I’ll be concentrating on sector ETFs and individual stocks as the major indices continue to see low levels of volatility.

As always, if you have any questions, please do not hesitate to email me at andy@cabotwealth.com.

Things are looking up in the market. The S&P 500 soared 3.5% last week and is now more than 7% higher YTD.

Investors love that the banking issues have had the benefit of tempering the Fed with no apparent offsetting crisis, so far. The expected timeline for the Fed to stop raising rates has moved way up, to one more rate hike from what could have been a hiking cycle that lasted the rest of the year.

This week, we comment on earnings from Walgreens Boots Alliance (WBA).


We also include the Catalyst Report and a summary of the April edition of the Cabot Turnaround Letter, which was published on Wednesday. We encourage you to look through the Catalyst Report. This report is a listing of all of the companies that have reported a catalyst in the past month. These catalysts include new CEOs, activist activity, spin-offs and other possible game-changers. We source many of our feature recommendations from this list. You will find it nowhere else on Wall Street.

WHAT TO DO NOW: The market remains stuck in the middle—on one hand, growth stocks and big-cap indexes are holding up very well considering the recent banking and economic fears, but on the other, the broad market is still weak, financial stocks are a mess and a couple of our key indicators are negative. All in all, then, we’re following the market’s split personality, holding about half in cash but also holding and nibbling on some resilient growth names. Tonight, we’re going to buy a half-sized stake in Axon Enterprises (AXON), though that will still leave us with 48% on the sideline.

Small-cap stocks have underperformed their larger-cap peers by a wide margin since Jerome Powell’s Congressional Testimony just over three weeks ago.


Part of that is because of the hawkish tone he struck. But mostly it’s because of the fallout of the SVB debacle, concerns over a 2023 financial crisis and what the spillover effects could be on the broader economy.

BYD (BYDDY) reported great earnings, and Novo Nordisk (NVO) got a lift from the World Health organization this past week – but the big news is that Alibaba (BABA) surprised markets by announcing on Tuesday a plan to split the $220 billion goliath into six standalone units.

There’s a new worry in the market – recession. Just when the Fed is finally chilling out, investors are moving on to the next bummer. The market still stinks, just for different reasons.


Until a couple of weeks ago the main concern was a more hawkish Fed. But the banking situation has mellowed the Fed, and the Central Bank just indicated it is nearly done hiking rates. It’s a relief on the Fed front but the economy could be a problem now.

I’ve never liked gambling. I went to Las Vegas once with friends and had a blast. But that was because the weather was beautiful, and we sat by the pool during the days and then had some good nights out. Some of my friends loved to play blackjack. I enjoyed it for entertainment value, but I was only interested in playing at tables with low minimums. Why? Because I know that the house always wins! (Unless you are Edward Thorp, the famous card counter.)

Last Thursday evening, I was a guest at a friend’s regular poker game. It seemed friendly enough – the regulars were average players (like myself), pleasant to spend time with (no jerks), and the evening included a tasty dinner. Also, favorably to me as the newbie, the stakes were modest.

The games were straightforward: 5-card draw, 7-card stud high-low, while a few others included a small field of common cards similar to Texas Hold’em. Betting was reasonable, with limits on both the size and number of raises. So far, so good.

This week, amidst the fireworks in banks, the Fed and more market volatility, there were no earnings reports and we had no changes in ratings on our recommended stocks.


Next Wednesday, we publish the April edition of the Cabot Turnaround Letter. We’ll tip our hand on the first article – which will be on possible bargains in the banking industry.

Yesterday the FOMC decided to move ahead with another 25bps hike, bringing its federal funds target rate to a range of 4.75% to 5%. The statement was missing the phrase, “...ongoing increases in rates would be appropriate,” which was present in the eight previous statements, suggesting the Fed may be done hiking soon.

Fallout from the bank failures and the Fed meeting tomorrow make this a big week in the market.

Let’s deal with the banks first. After the two bank failures this week and the buyout of ailing Credit Suisse (CS) over the weekend, the spotlight is on potentially vulnerable small regional banks. Although Silicon Valley Bank and Credit Suisse are very different banks with different problems, the common denominator is the markets, particularly the bond market.

This week, all everyone cares about is the banking system, and so I’ve been thinking about it a lot. I continue to believe that this banking crisis is manageable and NOT systemic. Here’s how I see it…

Enovix (ENVX) management hosted a two-hour-long presentation from their Fremont, CA factory yesterday afternoon that went deep into the company’s outlook for battery production, sales projections and customer interest. The team also talked about new senior management hires.

The Dogs of the Dow is an investment strategy that involves investing in the top ten Dow Jones Industrial Average stocks with the highest dividend yields. The theory behind the investment strategy is that the highest-yielding stocks have most likely lagged the market and as a result, are undervalued and due to outperform in the year ahead.

We currently own the VTI January 19, 2024, 145 call LEAPS contract at $54.50. You must own LEAPS in order to use this strategy.

Moving Kraft Heinz (KHC) to Sell

Our BITO 12 calls for the December 30, 2022, expiration cycle are essentially worthless. As a result, I want to buy back our BITO calls, lock in our premium and immediately sell more premium going out 32 days.

Today, a whopping eight Profit Booster positions will expire. Most are “slam-dunk,” full-profit trades, while others will go down to the wire.

The big takeaway, before we dive in, is we are going to let the situation play itself out, and come Monday/Tuesday of next week we will revisit our profits, as well as how we will manage the remaining positions.

We currently own the VTI January 19, 2024, 145 call LEAPS contract at $54.50. You must own LEAPS in order to use this strategy.

We’ve had lots of good fortune over the past six months in the Quant Trader service. Our quant-based approach where probabilities lead the way has led to 18 out 19 winning trades since starting the service back in early June.

I’m rolling my December positions into January. We still have to roll our December SPY calls, but I’m going to hold them for a few more days to allow time decay to work its magic.

Okay, we just sold a bear call in SPY for the January expiration cycle back on 12/1 and got out of the trade on 12/6 for approximately an 11% return. But, we still have 38 days left in the January 20, 2023, expiration cycle and the ability to sell some decent premium with the VIX hovering around 23.50.

A few Cabot Options Trader subscribers have asked me about ways to protect gains in their portfolios, so I thought I would write to everyone with a couple of strategies using options to hedge your portfolio.

A subscriber recently asked me if I keep a journal of my trades. Many traders keep journals so they can look back at their trades and evaluate what they did right and what they did wrong.

Want to know how the big institutional investors use options? Here is an example of how one trader spent $132 million on three technology stocks.

Options trading has its own vernacular. To know how to do it, you need to know what every options term means. Here are some of the basics.

Our Cabot Top Ten Trader’s market timing system consists of two parts—one based on the action of three select, growth-oriented market indexes, and the other based on the action of the fast-moving stocks Cabot Top Ten features.