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At the beginning of August, Cabot Benjamin Graham Value Letter featured four buy recommendations that collectively have outperformed the stock market indexes by a noticeable margin. I’m featuring one of the stocks here because it’s still clearly undervalued.

A team of reporters from Reuters calculated how much the world’s investment banks had disclosed writing down from derivatives in the past year, from the third quarter of 2007 through the second quarter in 2008, ending July 31. The total? $404 billion. In just four quarters, Wall Street wiped out its previous 10 years of profits. Even the airlines aren’t that bad.

Two weeks ago I wrote here about the massive buildup of both government and individual debt in last 70 years. I noted that this bubble of debt appeared to have popped in the past year. And I speculated that a very long (decades-long) period of debt shrinkage and balance sheet improvement might be in the cards. Then I asked for your opinions.

Markets don’t stay down forever, and this historic selloff has created a whole raft of bargain stocks. There’s just one problem. How do you know when to get back into the market? Here’s an easy way to tell, one that’s based on one of Cabot’s powerful set of market timing indicators, the Cabot Tides.

To say that we live in historic times would be an understatement. We’ve all been shaken by more earth-shaking news in just the past few months than we’ve seen in the prior decade. There’s been the takeover of Fannie Mae and Freddie Mac, the disappearance of Lehman Brothers, Bear Stearns, Washington Mutual and Wachovia, the TARP rescue plan and now the potential bailout of the Detroit automakers. Oh, and did we mention hedge fund redemptions and failures, and now commercial real estate problems?!? And the market, of course, has reacted.

I was lucky when I first began investing. I didn’t learn how to pick stocks from a textbook, or a well-meaning but misinformed professor. No, I first got interested in stocks when my dad subscribed to the Cabot Market Letter back in the mid-1990s, and learned right away the value of doing the right things, and avoiding the wrong things.

The economic news is probably going to get worse before it gets better, but it’s likely that the stock market won’t care. The stock market looks ahead and has probably already priced in most of the economic downtown. So be prepared for once-in-a-lifetime bad economic readings, but don’t expect the stock market to follow them down.

Last week I wrote about the government’s $700 bailout plan and asked for your opinions. I got an incredible response, both by email and on the blog. I really appreciate hearing what you had to say and it helped me to sort out the whole mess in my head. Today instead of writing a column, I’m just going to reprint many of your letters. Some of you were outraged about the plan, while others urged its passing and still others came up with their own plans for the $700 billion.

Since 2004, value investors from across the country have converged on the Value Investing Congress, and this year our very own J. Royden Ward, editor of Cabot Benjamin Graham Value Letter, is going to attend. It’s taking place in New York City on October 6 and 7 (with a pre-conference workshop on October 5) and will be attended by value investors and money managers from around the world seeking to enhance their performance.

Admittedly, the list of good-looking stocks is extremely small these days; that’s how it is at market bottoms. But the few stocks that do reveal strong investor support are worth following closely--particularly if they have great growth stories--because they’re the stocks most likely to lead the next market advance. One sector we’re keeping on eye on is the airlines.

My stock idea is, very simply, the #1 stock on my watch list right now. The company sports most of the characteristics of past leaders--fast sales and earnings growth, healthy profit margins, a unique position in a mass market, and a huge opportunity for growth going forward.

You’re living through a historic stock market event, one that will be dissected in texts and articles for as long as people study the market. Congratulations! If your grandchildren ever get interested in the stock market and its history, you have a first-class, first-hand war story to tell them. It’s a tale of greed and fear--the constant poles of stock market emotion--plus a clash of opinions about the proper role of government in the market. It’s a classic case of good news and bad news, and there’s been plenty of each.

Every now and again I like to do a question and answer issue of Cabot Wealth Advisory--we editors at Cabot spend hours each week answering subscriber questions, so we have a large pool to choose from. I think it’s a good idea to share some of these questions with everyone, as much can be learned from a good question and a good answer.

Solar power is one of my top investing concepts for the years ahead. I think solar (along with other alternative energy sources) will gain increasing market share in the years ahead. As costs of fossil fuels rise, the still-high costs of solar power look less prohibitive, especially when various tax credits are factored in. The increase in manufactured volumes means costs are coming down, particularly for the manufacturers that don’t use silicon.

Oil billionaire T. Boone Pickens recently dropped a campaign to push for the adoption of wind power on a large scale because he’s in the process of building the word’s largest wind farm in the Taxes panhandle. When the oil barons start going Green, you’d better take notice. Today I’m going to evaluate some stocks that might benefit from this endeavor.

I’m a big believer in heroes. They remind us that something can be built from nothing, that victory can be snatched from the jaws of defeat, that we should aim high, and that we should never give up. One of my heroes, John Marks Templeton, passed away last week. John was a pure value investor, with a very long-term perspective and an appreciation of global markets.

I’ve taken a few weeks off from the series I’m writing to help explain Cabot’s publications, but today I’m going to discuss Cabot Top Ten Report.

Throughout the 13 years he was steering the Magellan Fund, Peter Lynch became known for his philosophy that you should invest in what you know. Buying what you know has long since become a bit of Gospel among a large segment of investors--after all, if it worked for Peter Lynch, it should work for you. But it can taken too far, such as when you invest in a company without checking out its management and chart.

At the root of creative destruction, according to Joseph Schumpeter, are entrepreneurs, some laboring as individuals and some as employees of forward-looking firms, but all possessing a spirit of innovation that drives economic growth forward by improving on and “destroying” the old. And if the old is a hide-bound, monopolist entity or system that has long been a barrier to progress, so much the better.

We admire people with the courage of their convictions, those who know their own minds and don’t waver. It’s a good thing to be called tenacious, persistent, tough, steady or steadfast. A good thing, that is, if you’re not a growth stock investor. The rules say that growth investors should stick with a winning stock for as long as it rises. The problem comes when a stock starts to lose value but the investor has faith in the stock and demonstrates that conviction by holding it all the way to financial disaster.