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Strong fourth-quarter earnings are confirming what the market was already doing.

Current estimates based on earnings reported so far are for 13.2% overall S&P earnings growth for the quarter. It’s a solid quarter and the fifth straight quarter of double-digit earnings growth. In terms of sector performance, cyclical companies are killing it, and technology is floundering, just like before earnings.

It’s a great time for income. The market is at an all-time high. The May through November period is historically a more lackluster period for stocks. Income generation is an ideal way to generate positive returns when stocks aren’t rising. But not if the stocks generating the income get knocked down by rising rates.

There is a great answer: midstream energy stocks. These are companies that transport and store oil and gas for a fee. The subsector is among the highest yielding of all income-generating stocks. And unlike many dividend stocks, they have thrived over the last few years of rising interest rates. For the most part, these stocks are not interest rate sensitive and can endure inflation or recession. They have proven to be the perfect sector to generate a high income in this market environment.

In this issue I highlight a stock that has been the very best income generator in the Cabot Income Advisor portfolio. It has been held profitably in the portfolio on three past occasions. Each time it delivered a positive total return along with several covered calls for huge income. It’s a tested and true income-generating superstar.

The S&P spent most of the first half of July setting new highs. But that changed last week. The technology sector sold off on news of new AI chip export restrictions to China. The S&P fell about 2% for the week, giving up most of the gains for July. It may be a blip. It probably is. But the market is high, and stocks showed vulnerability to bad headlines.

A flatter or down market going forward makes income more valuable. The cash register continues to ring regardless of short-term market gyrations. At the same time, many income stocks are still cheap, and interest rates are likely to trend lower from here.

Some of the very best income stocks are in the energy sector. After recent price shocks and other problems in the energy sector, investors are coming around to realizing energy is a strong business that isn’t going anywhere for a long time.

In this issue, I highlight one of the best natural gas companies on the market. It is a newly formed company in the business of exporting abundant and cheap American natural gas overseas. It’s big business. In a short time, this company has become one of the world’s biggest natural gas exporters.

January was shaping up to be another stellar month for stocks. The S&P 500 closed last week 3.73% higher for the month.

But stocks came crashing down on Monday when a Chinese start-up claimed that its highly popular AI assistant performs equally as well as leading models at much cheaper prices and using far less data. It calls into question the anticipated demand growth for AI.

But the selloff is probably an overreaction. This is the problem with high-flying stocks. Any bad news gets dramatically amplified because euphoria is so easy to disappoint. The AI catalyst is still very real. But it may have gotten ahead of itself. A day like Monday was bound to happen. It also creates opportunity.

In this issue, I highlight one of the best technology stocks on the market. It was riding high for good reasons, rapidly growing profits. Monday’s overreaction prompted the worst selloff of the stock in years. There is likely to be a bounce back and the stock can generate very high-priced calls.

“Tim, Thank you for finding Tesla stock when it was relatively unknown—that’s what allowed me to buy my Model X.”
R. Kieft, Anchorage, Alaska

This portfolio stock reported last night what can only be described as an outstanding quarter.

You may not like cannabis, but you can profit from its incredible boom by investing in the best cannabis stock to buy today.

My grandfather used to say, “Only buy insurance for things you can’t afford to replace.” By this reasoning, buying health insurance is a good idea. Replacing and fixing even small parts of human bodies is very expensive. But while the concept of health insurance makes sense, I’ve always thought the execution...

The broad market and growth stocks started to have issues in late September and by early November everything went over the falls, cracking the intermediate-term trend of most indexes and stocks. Encouragingly, though, the market has rebounded this week as we march toward the Thanksgiving holiday--it’s good to see, but especially for growth measures, there’s still more proving to do. Of course, with a lot of cash, we’re willing to buy, and if we see strength continue into early next week (past the holiday period) we could start putting money back to work. For now, though, we think it’s best to be patient and see if the market (and, more important) growth stocks can tell us the selling storm is definitively over.

AI is the catalyst driving the technology sector, which is driving the market higher. Over the last month, the tech sector is up 10.42% while the S&P is up 2.95%. Seven of the 11 sectors are negative for the past month.

But technology stocks may be running out of gas. Without the heavy lifting from technology, it’s easy to see the overall market trending sideways or down, at least for a while.

Income is king in markets like this. The register still rings when the market stumbles. There’s also an opportunity right now. With the S&P and many stocks near their 52-week highs, it’s a good time to get high call premiums. Also, you can lock in strong total returns from these stocks if they are called.

Even the best bull markets have ups and downs. We can play the increased likelihood of a flat or down market by priming the income pump to pay us through the rough patch. In this issue, I target another covered call that will enhance the already exquisite income of a monthly dividend stock.

Uh oh. The rally is in trouble.

The market sort of wobbled into January after a rough December. It started good but things turned a little ugly last week after a better-than-expected jobs report and worries about sticky inflation.

Welcome to the post-Labor Day market. A sobered-up investor can be an ornery investor.

Stocks kicked off the first trading day after Labor Day on a decidedly negative note. The August manufacturing number was still somewhat weak, but all eyes are on the August jobs number that comes out Friday. It was the weak July jobs number that prompted recession fears and the market selloff in early August. Another bad number could reignite recession worries that had faded in the second part of August.

Wow. Just wow. Not only has this market rally continued to forge on, it’s broadened out too. After a 14.5% gain in the first half of this year, the S&P is putting together an impressive July with a better than 3% gain so far.

The latest leg of this rally has been sparked by a better-than-expected June CPI report. Interest rate optimism abounds. Consensus now expects a Fed rate cut before the end of the year and an increased expectation that overall interest rates have peaked and are likely to trend lower for the rest of the year.

It’s one thing after another. But stocks keep inching higher.

January featured the interest rate scare, as the ten-year Treasury hit the highest level since 2023, and the DeepSeek news, which called AI spending into question and sent related stocks reeling. Yet the S&P 500 finished the month up 2.7% with 10 of the 11 sectors higher for January. This week features more potential market-moving issues.

This month I’m featuring an innovative software company with an AI angle.

While AI is all the rage, bordering on hype, this company’s learning platform has been harnessing the technology for a few years. The latest iterations of AI are likely to help make its product better and open new monetization opportunities.

It’s a neat story and the company has terrific products that are loved by users. Because of the recent run in tech stocks, we’ll start with a half-sized position. Enjoy!

Cannabis legalization is spreading but cannabis stocks are trading near all-time lows, which leaves these four industry leaders poised for a rebound.

The Cabot Market Letter has been timing the market for over 37 years, and it is darned good at it. Even the Hulbert Financial Digest has noticed, giving the Letter an attaboy for its success in getting out of bear markets and back into bull runs. There are reasons for the divergence in the opinions of Cabot and the market commentators, and they don’t require that one or the other has to be wrong. It’s a good illustration of the power of the individual to grab victory from the jaws of defeat. Here’s how it works.

Yesterday, investment manager Elliott Management Corp. sent a letter to Marathon Petroleum (MPC), the nation’s largest energy refiner, seeking changes that could potentially increase the MPC share price.