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You can do well enough to take control of your retirement, rather than just drifting toward it like a canoe heading for the waterfall.

The market was looking pretty good through last week. Then this week, with no meaningful progress on the debt ceiling, momentum has deteriorated.


Yesterday afternoon U.S. House Speaker McCarthy was on a roll, saying that things are going a little better, that he won’t put a bill on the floor that spends more than last year and that the President is realizing he has to spend less.



JPMorgan says they put the odds of no debt ceiling deal by early June at around 25% and rising.

The earlier people retire, the sooner their cognitive functions begin to decline.

Small and large cap indices are up around 2.4% from Friday’s close and the portfolio is up almost 5%.

Cabot’s market timing disciplines give clear signals for when to trust the bull and how to get out of the way of the bear.

Chloe Lutts recommends Ecana Corp. (ECA) and Cheniere Energy Partners LP (CQP).

There has been a flurry of reverse stock splits of late. Are they good for investors? Traditionally no. But there are exceptions.

The market seems to be a bit complacent given the risks of the virus spreading rapidly in China and elsewhere but we need to remain a bit cautious. There is some suspicion that China is downplaying the numbers.

There’s no doubt things are looking a little better out there as many software, MedTech and other growth stocks retested their March lows late last week then turned north. The timing of that short-term reversal, coinciding with the end of the first quarter, most definitely has me feeling better about the state of things right now.

Even though stocks have been wobbly today the last week has been very constructive for our portfolio. As of mid-day today, our portfolio is up an average of 4% from last Thursday’s close, and only two positions are down (neither by more than 2%).

Individual stocks continue to move around based on earnings reports and, for the most part, things appear to be quite good. Many management teams aren’t yet sticking their necks out and issuing rosy guidance for 2020, and that’s causing a few dips here and there.

The market’s trends were looking pretty iffy until better-than-feared inflation data came out on Tuesday (PPI) and Wednesday (CPI).

Those data releases finally gave Treasuries a boost and knocked the 10-year yield down from last week’s level of 4.8%, which was the highest since November of 2023 (the 10-year yield hit 4.74% last April, which was close, but not quite as high as last week).

WHAT TO DO NOW: Remain defensive, but keep your eyes open. Yesterday’s rally was noteworthy and may have started (or will soon start) a process of repairing the damage from the recent selling. That said, the market’s trends are still down and few stocks are in great shape, so the odds favor the repair process taking some time. Of course, we’re flexible, so if the buyers go wild, we’ll act, but tonight we’re again standing pat and seeing how this bounce plays out. Our cash position remains near 87%.

Thank you for subscribing to the Cabot Turnaround Letter. We hope you enjoy reading the February 2022 issue.



The market seems to be ignoring small- cap stocks. We highlight four high-quality small- cap companies with beaten down share prices. And, amidst the rubble of initial public offerings, we found three worthwhile companies whose shares trade below their IPO price. We also briefly comment on the market’s recent sell-down, and provide an update on the performance of our group of recommended stocks, which have held their value so far this year.



Our featured recommendation this month is Polaris (PII), the leading North American manufacturer of powersports equipment including off-road vehicles, snowmobiles, motorcycles and boats. Investors are overly -discounting near-term issues, leaving the shares significantly undervalued.



We note our recent price target increase for Baker Hughes Company (BKR), from 26 to 31.

The success of headliners Walmart and Target in the last week has helped drive consumer staples stocks as a group up nearly 5% in August. No other S&P 500 sector has performed better this month. And yet, consumer staples are “only” up 14% year to date, trailing the gains in the S&P 500 (17.3%).

Thus, the sector as a whole is still undervalued. That spells opportunity.

This is the 13^th bull market in the S&P 500 since 1950. If it ended today, it would tie for the shortest – just over 21 months – with the last bull market, the post-Covid-crash rally that began in March 2020 and tidily peaked at the end of 2021. The average bull market, according to statistics from Ryan Detrick of Carson Investment Research, lasts 65 months.

Does that mean this one can’t up and fizzle right now, taken down by a “carry trade” in Japanese equities, one bad U.S. jobs report, and a whole lot of political (presidential election) and social (war in the Middle East possibly spreading) uncertainty? Of course not. We know a bull market can last only 21 months because we just saw it happen.

Inflation is dead.

OK, it’s not “dead.” But at 2.9% in July, as reported Wednesday morning, it has now (narrowly) reentered the Federal Reserve’s magical 2% realm for the first time in nearly three and a half years – since March 2021. For all the inflation angst during those past three and a half years, the market has fared pretty well overall – the S&P 500 is up 30% since the first CPI print north of 3% was reported in mid-May of 2021. On a per-year basis, that only slightly trails the average annual return in the large-cap index of 9.9% since its inception in 1928.