Last week the stock market once again had some wild ups and downs, led mostly by volatile moves in the bond market. And while the start of the week was ugly, the action Friday was impressive – though the situation in the Middle East may throw those good vibes from Friday right out the window. By week’s end the S&P 500 had gained 0.5%, the Dow had fallen 0.3%, and the Nasdaq had risen by 1.6%.

The market remains in a correction, with most indexes, sectors and stocks in control of the sellers, and until that changes, we’re advising a cautious stance with plenty of cash and little new buying; in the Model Portfolio, we trimmed further this week and are up to around 65% in cash.

That said, we’re staying alert for many reasons, not the least of which is that we’re starting to see some real, true oversold readings (which we consider “alerts”) and because more than a few growth stocks are resisting the decline, hitting higher lows since August. That’s not a reason to buy, but we’re keeping our watch list in good shape and are ready to move if the buyers appear.

Explorer stocks, with the exception of Neo Performance (NOPMF), held their own in a difficult week. The market concerns center on the impact of high interest rates and mortgage rates on consumer spending, investment, and economic growth.

We’re switching things up this month, steering clear of high-tech, medical devices and other fancy types of companies.

This company is super easy to understand, sells a product pretty much everybody adores, has a seasonal tailwind and is executing on its profit growth agenda.

All the details are inside this month’s Issue.

Ahead of the long holiday weekend the market had yet another good week. The S&P 500 gained 1.75%, the Dow rallied 1.5%, and the Nasdaq rose another 1.9%.

This week in an attempt to diversify the portfolio we are adding an energy play.

Thank you for subscribing to the Cabot Value Investor. We hope you enjoy reading the October 2023 issue.

We include brief updates from investor day presentations by Philip Morris International (PM) and Sensata (ST), as well as comments on our other recommended names. We also share a view on how streaming services are changing the sports viewing experience, along with a thought on why Comcast (CMCSA) should be fine.

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.

I’m best reachable at Bruce@CabotWealth.com. I’ll do my best to respond as quickly as possible.

The market looked ugly early last week before finding some support, but we’re going to need to see more before changing our stance. We will say that, with September in the rearview mirror, there are many studies that point to a year-end rally and we continue to see a decent number of potential growth-y leaders that aren’t far from overcoming some technical hurdles. In other words, now’s not the time to stick your head in the sand, but as always, we want to see it first (some decisive buying) before taking much action. We’ll leave our Market Monitor at a level 5.

This week’s has a broad array of resilient stocks, with our Top Pick in pole position to be one of the top growth stocks—if and when the market gets going.

October is the most celebrated month in Cabot’s native home of Salem, Massachusetts (i.e., home of the Salem Witch Trials). All month long, it’s one costume-heavy Halloween party. Will a similar party commence on Wall Street? The odds favor it. October has a long history of being a month where markets bottom – and rallies begin. In fact, it happened just last year. One area of the market that has already begun to rally is cannabis, thanks to some (long overdue) new legislation. So today, we add back a bit of cannabis exposure courtesy of Cabot Cannabis Investor Chief Analyst Michael Brush.

Details inside.

Our BITO calls expired worthless and as a result, we were able to bring in roughly 3.5% on the trade. I will be selling more calls early this week.


Otherwise, all continues to be well as we head towards the October 20, 2023, expiration cycle. There isn’t much to do other than allow time decay to work its magic as we head closer and closer to the end of the October 20, 2023, expiration cycle. If our positions act accordingly, we have the opportunity to buy back our positions early, lock in profits, and bring in 5% to 10% worth of call premium over the next week or two.

As I stated last week, volatility has once again made an appearance. However, as we have all seen over the past few months, sightings have been rare and, more annoyingly, fleeting. If volatility and in turn IV ranks are able to stay at current levels or potentially rise a little, we should begin to see opportunities pick up. As always, my goal is to have three to five open trades at any given time. With IV ranks low across the board the past few months, we’ve remained patient and kept our powder dry. But all of that is quickly changing, at least for the moment. If volatility continues to trade around these levels expect to see a few additional trades. As it stands, we have two open trades, one of which we opened late last week and thankfully, both trades look good at the moment.

I’m going to keep it short today, with just a quick update.


The earnings calendar is somewhat bare as we finally reach the end of the earnings doldrums. Next week, however, earnings season finally returns with several of the big banks due to report, including Citigroup (C), JPMorgan Chase (JPM), Wells Fargo (WFC) and several others. I expect to be a part of one, if not two, of those earnings announcements. Of course, I will go over a preliminary, detailed look at a trade or two in next week’s issue. However, until then, we should expect to stay on the sidelines as there just aren’t any opportunities that meet our strict criteria.

The bond market’s wild gyrations were once again front of mind for traders last week, though interestingly by week’s end the market was mostly mixed as the S&P 500 lost 0.75%, the Dow fell 1.34%, and the Nasdaq was virtually unchanged.

I love Twitter. The social media platform, not the stock.
While it’s easy to get lost “doom scrolling” on Twitter, I find it to be an incredibly helpful investment tool.

It’s been a furious rally so far this week. It’s only lunchtime on Tuesday. But I’ll take it.
September was an abysmal month, in a rotten third quarter, in an awful 2022. Investors can’t contend with persistent high inflation, a hawkish Fed, and a recession. The most recent selloff took just about every stock down with it.

There’s no disputing that gold has been one of this year’s most “boring” markets. What started as a promising New Year—with investors almost unanimously expecting inflation to skyrocket (thereby boosting gold’s appeal)—has mostly seen rising interest rates and a strengthening dollar consistently undermine interest in the metal.

The largest lender in the U.S. is now using blockchain. The bank also just announced they plan to hire about 2,000 more software developers worldwide by the end of the year according to Lori Beer, the chief information officer. JPM is making huge investments in computer science while other competitor financial institutions have lagged. JPM plans to spend $14 billion dollar on technology this year.

This note includes the Catalyst Report, a summary of the October edition of the Cabot Turnaround Letter, which was published on Wednesday, and bullet points of our podcast.

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.

Stocks are having another terrible day today, with investor fears building that the Fed will push the economy into a deep recession. As of 2:10 pm, the Dow is off 656 points and the Nasdaq is plunging 409 points.

The market tried to stage a small rally yesterday. But the combination of a consistently hawkish Fed, rising concerns of a global recession and increased risk of something going sideways in the financial markets (witness the Bank of England launching an emergency government bond buying program) is making it tough for the market to get off its knees. Stocks are selling off again today.

The market hit a new bear market low. That means that the summer rally was indeed just a bear market rally. And stocks may go lower.

Two things spooked investors, persistent inflation and a consequentially persistent Fed. After four Fed rate hikes, a bear market, and two straight quarters of negative GDP growth, inflation remains sky high and barely budging. The Fed will have to remain hawkish for longer.

The Fed insinuated that it is willing to drive the economy into recession, or deeper recession, to tame inflation. That makes it increasingly likely that only a hard landing can bring prices down. The economy is likely to weaken in the months ahead, dragging corporate earnings down with it.

Greentech is in a zone of support. While it has declined about 14% in the past two weeks, which is discouraging, we’re seeing buying coming in at current levels, where, technically, is an area we want to see bulls pushing back. Overall, the Greentech Timer is telling us to be cautious – it’s below all three of the moving averages we watch and on Friday, trading broke support from an earlier gap higher. The area of real concern for our sector would come with another 10% decline from today’s levels.

As I think about where we are in the economic cycle, I think financials should be relatively well positioned.

The awful financial market conditions continue to deteriorate. As everyone knows, the domestic stock market ticked below its midsummer low and is now down over 23% from its November 2021 peak. Stock prices in developed country markets have fallen in local terms just as much if not more that the major U.S. stock indices. Emerging market returns (in local terms) have slid 21% YTD. With the awe-inspiring gains in the U.S. dollar, up 19% YTD, global stock returns for American investors have been downright dismal.

To kick things off to better understand the world today, I want to start with recent comments by John Paulson. John made his fortune shorting subprime mortgages during the 2008 housing bubble.

Here we highlight comments on gold because it is one of the world’s most traded and highly sought-after commodities. Gold does share traits with Bitcoin, and BTC should trade similarly to gold over the next 10 years.

We recently locked in two profitable trades in SPY and XOP. Today, we are going to go back to the well and place another bear call spread in the SPDR S&P 500 ETF (SPY). Implied volatility is still inflated.

In today’s trade alert, like my last one, I want to start out by selling cash-secured puts with the intent of eventually wheeling into the position.
This will make our fourth position in the Income Wheel Portfolio. Our goal is to ramp up to five to ten. As for our open positions, you can read my thoughts in the previous issue, or watch the webinar from last week.

We continue to take a patient approach to ramping up our portfolios, given the current market conditions.
Last week was one of the worst weeks we’ve seen in quite some time, so we decided to sit on the sidelines and allow the carnage to unfold without adding any new positions.


That being said, our All-Weather portfolio performed mightily, actually closing out the week slightly positive, and is up since we initiated our positions, which tells us just how the strategy fares in difficult markets.

Despite many ups and downs, and a trade that went south fast (ZIM), the CPB portfolio held up fairly well during the most recent market rout. Not all trades are winners, but big picture, given the carnage, I’m fairly happy with June expirations trades. Let’s dive in:

Our timing was incredibly fortunate for this one as XOP pushed significantly lower almost immediately after our alert was sent.
Now I want to close out our XOP July 15, 2022, 190/195 bear call spread today for $0.04. By closing out the trade today we can lock in roughly 15%.

First, I wanted to thank all of you for the kind words regarding yesterday’s webinar. I hope all of you found it helpful. As I stated in the webinar, if you have any suggestions, comments or questions please do not hesitate to email me at andy@cabotwealth.com. I appreciate all of your feedback as we want to make all of our webinars an engaging monthly event for everyone.

The market is taking it on the chin today (again) as interest rates soar (+6% to 3.35% and a new 2022 high) and inflation/recession fears tick up. I had ZoomInfo (ZI) on high alert last week given its proximity to support near 33.8.

As I stated last Wednesday, going forward I plan to shorten the alerts. If you still have any questions, please check out the prior alerts or, even better, take a look at the strategy guides on your subscriber page.

Today’s inflation data (CPI) wasn’t expected to be great but was even a little worse than anticipated as consumer prices rose 8.6%. That’s up from 8.5% in March and 8.3% in April. One can slice and dice the data a lot of ways but if you want to flag the main issues, they are probably energy and food prices.

I just wanted to give everyone a brief update that I’ve decided to wait until Monday to send out a trade alert for trades in the Vanguard Total Stock Market ETF (VTI) and iShares 20+ Year Treasury Bond ETF (TLT).

In today’s trade alert, like my last one, I want to start out by selling cash-secured puts with the intent of eventually wheeling into the position.
But I also want to place a trade that’s a bit more on the aggressive side as well. Some of you may be interested, others the opposite due to the underlying. But remember, we are trading statistics. The underlying is almost secondary. I’ll explain below.

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.