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Moving Brookfield Asset Management (BAM) to Sell

Markets go up and down. Economies boom and bust. Investors get scared and they get greedy. But one of the few constants in an ever-changing investment landscape is the need for income. And investor demand for income is growing as the fastest growing segment of the population is 65 and older and retired.

The demand for the very best income stocks should remain strong. Also, during sideways and down markets, dividends account for most of the total market return. In problematic decades, dividends have almost completely offset market price declines.

It’s true that dividend stocks can still fall in a down market. But the long-term trend for the market is higher. History clearly shows that bear markets are the best time to get in cheap ahead of the next bull market. Meanwhile, dividends provide an income and less volatility while you wait.

NanoString (NSTG), Aerohive (HIVE) and Q2 Holdings (QTWO) reported earnings.

This portfolio stock reported Q1 results after the close yesterday that should have investors feeling pretty good about the company’s ability to weather this pandemic.

The market is certainly healthier, but it probably won’t go straight up from here. In fact, it’s more likely that sellers will see this bounce as an opportunity, and we’ll get another, probably smaller, leg down before the market starts a sustainable new uptrend.

Small caps continue to trend sideways as they have since the beginning of 2017. In the S&P 600 Small Cap Index, this means trading mostly in the 820 to 860 range with a few spikes above and a few below. There’s no doubt the market rally has lost momentum as the small cap index has traded mostly below its intermediate trend line over the last five weeks.

Mike Cintolo, our market timing expert, wrote earlier this week that he wouldn’t be surprised to see this correction develop one more leg down, and it looks like that’s what we’re getting. All the major indexes opened significantly lower yesterday, and while they rebounded partially in the afternoon, the turbulence sent the VIX surging to its highest level since the U.S. election.

Most positions are up 5%-6% for the week, with a couple of exceptions.

One yield-boosting strategy that’s increased in popularity is writing covered calls on dividend paying stocks.

In the January issue of Cabot Early Opportunities, we take a look at updates within our portfolio then dive into five stocks from markets ranging from defense to cybersecurity to the blooming IT infrastructure market.

As always, there’s something for everybody!

It is always a good time to review your retirement planning to make sure you’re making the best use of the retirement options that are available to you.

Part of my job at Cabot is fielding emails from our Cabot Wealth Advisory subscribers, and one question I see quite often is, “What are the differences between Cabot’s publications?” I’m going to explain our newsletters, one at a time in an ongoing series. This is part one of the series, focusing on Cabot Market Letter, our flagship publication.

It was yet another strong week for the market and countless stocks, many of which are breaking out to new highs. At some point the market may cool off, but for now at least, I’m not seeing any truly worrying signs. And in fact, the S&P 500 closed at a new record high as the index gained 1.44% on the week, while the Dow added 1.56%, and the Nasdaq rallied 1.63%.

Just reading those words, “climate change,” is almost certain to light up emotions. Regardless of one’s opinions on the degree of urgency and which of a very wide range of proposed policies and actions should be taken, how could words about the end of the world as we know it not ignite emotions?

The moral of the story: Successful investors always consider risk when analyzing their portfolio, adhering to rules like cutting losses short (if you’re into growth stocks) or diversification (value stocks). I constantly talk to investors who fail to think of the downside, plowing a huge percentage of their portfolios into a few stocks ... and then failing to cut the loss short if things go amiss.

A low-yield market environment has been making it tough to generate income these days. Watch Tom Hutchinson, Chief Analyst of Cabot Dividend Investor as he talks about how to deal with this income crisis.
During this FREE webinar recording he explains how to get a double-digit annual income from supplementing dividend stocks and income paying securities with timely purchases and strategic investments. Tom also tells you about two high-yield stocks to get you started.

“Jacob, thanks so much for your help getting me a 20% gain in the last 3 weeks on my entire brokerage account. I might not see a stretch like this again anytime soon, but I know you made it possible. Really the last month has made the effort and anguish on my part trying to learn to trade worth it.”

D. Conway, Stuart, Florida

The idea that rising interest rates are bad for stocks is a market truism that isn’t true. For evidence, let’s look back at the last 15 years of rate hikes.