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Europe’s stock market has underperformed the U.S. by the most in almost three decades.

While the S&P 500 index is up about 25% so far this year to record highs, Europe’s benchmark Stoxx 600 is only up 5%. That underperformance in returns is the biggest since 1995, according to Bloomberg. The other side of the coin is that the S&P 500 is now trading at 22.5 times forward earnings and is at a record high 70% premium to the Stoxx 600. The European Union (EU) bloc is the world’s third-largest economy, with a market of 450 million consumers, and controls the world’s second-most-used currency, the euro.

So today, we go to Europe (literally!) to add a new stock to the Explorer portfolio that looks poised to outperform.

This month we’re jumping into a new IPO that’s following in the footsteps of Livongo and Teladoc, bringing an innovative digital health solution to the masses.

As with those firms, this company sells solutions to companies, but it is the end consumer that uses the products, which are aimed at improving engagement and health outcomes while reducing costs.



With limited history as a public company, an earnings report coming next week, and the recent news that Livongo and Teledoc will merge, I expect shares of this company will be somewhat volatile. Please be sure to average in. We are starting with BUY A HALF rating today.



All the details are inside this month’s Issue. Enjoy!

Centrus Energy (LEU) shares jumped almost 19% this past week and are up 70% in the last six months. Dutch Bros (BROS) shares gained 6.3% this week following weekly gains of 10.6% and 36%.

Tariffs took center stage this week as the incoming Trump administration indicated day-one 25% tariffs on Canada and Mexico and some more for China as well.

One of the things I want you to remember, as the market falls lower and lower and bad news about politics and the economy multiplies, is this: Market tops occur when the news is best, and market bottoms occur when the news is worst. Thus, somewhere ahead is an absolutely terrible news day that will mark the market bottom—but I don’t know where.

What I do know is that it will come, and that the bull market that follows it will be very rewarding, particularly for investors who are prepared for the bull—and I hope that’s you.

We’ve had a huge stock market rebound in October, with the NASDAQ up 9%, and the Dow and S&P 500 each up about 8% month-to-date. Investors are going to breathe a great sigh of relief when they see their October 31 account values.

Major indexes are at all-time highs as data indicated inflation retreated a bit. And many of our positions are soaring.

That includes new addition Neo Performance (NOPMF), whose shares were up 17% during the stock’s first week as an Explorer recommendation as the company reported a swing to profitability. It wasn’t our only holding to post double-digit performance last week.

Details inside.

This was a difficult week for stocks. Yesterday the S&P 500 sank 2.3% while the tech-heavy Nasdaq declined 3.6%. Collectively, the so-called “Magnificent Seven” lost $768 billion in market value.

America does face some uncertainty but overall has a strong economy but, as I have highlighted, the stock market has become too concentrated at the top and debt is building up too rapidly. China, on the other hand, faces economic issues such as weak consumption, a property slump, 20% youth unemployment, and a struggling stock market in the red so far in 2023. Given the size and importance of China’s economy, this impacts all markets.

I previously gave you a heads up that new low-sulfur diesel regulations (IMO 2020) and a serious hog disease in China (African Swine Fever) are quite likely to increase inflation numbers in 2020 and beyond. Are you ready for the next sweeping industrywide change that will be hitting the credit markets?

After six consecutive weeks down, the market has generally given up all its gains for the year; taking profits when they were there was definitely wise. But this week the market is up—so far—and I’m watching carefully to see which of our stocks bounce like tennis balls—and which bounce like eggs. The best tennis balls can still be your road to profits.

Overall, though, the climate is definitely unsupportive, and thus a defensive stance, including plenty of cash, is warranted.

Corporate America is weathering trade uncertainty remarkably well. The S&P 500 index has recovered more than 20% since bottoming out in April but is up only 6% this year.

You may have noticed that the stagflation scenario (inflation and slow growth) is a theme being promoted by the financial media with comparisons to the 1970s. But even if this becomes a reality, stocks are still your best option to protect and grow your wealth. In the 1970s, large-cap value outperformed growth stocks and long-term Treasury bonds. Dividend-paying stocks also outperformed. Our strategy will remain the same regardless of the pundits, value, quality, and momentum.

The bull market remains alive and well, with most stocks and sectors in good shape, so we\'re generally letting our winners run and staying heavily invested. That said, January is often a tricky month, so with the potential for potholes and volatility, tonight\'s Cabot Stock of the Week is a mega-cap growth stock that, by some measures, is undervalued.

Bitcoin is sometimes referred to as “digital gold,” but investors should also have some of the real stuff. As J.P. Morgan put it, “Gold is money. Everything else is credit.” So today, with gold prices on the rise, we add exposure to the yellow metal in the form of a low-risk streaming and royalty company.

In today’s note, we discuss pertinent developments for several of the stocks in the portfolio, including Agnico Eagle Mines (AEM), Alcoa (AA), Atlassian (TEAM), GE Aerospace (GE), Paramount Global (PARA), SLB Ltd. (SLB) and Starbucks (SBUX).


Gold and silver continue to benefit from safe-haven buying, boosting our holding of Agnico Eagle Mines (AEM).

It’s been a rough couple months for growth stocks. But the most beaten-down small-cap stocks could be big money makers when the selling ends.

First, note that due to next week’s holiday (and the market being closed), your issue will be delivered one day later, on Tuesday, January 19.

Today, the market’s main trend remains up, and thus I continue to recommend that you be heavily invested. However, I also see a lot of potential for corrections from this dizzy height, so I’m selling one stock today (TSM) and downgrading two to hold (NUAN and QCOM).



As for today’s recommendation, it’s a low-risk dividend-paying stock we actually owned for two months last year—and did well with. And I think the portfolio can benefit from it again now.



Full details in the issue.

The broad market sold off today, but odds are it’s just a normal pullback in the renewed bull market. Overall, our market-timing indicators tell us the trends are up. However, eternal vigilance is the price of success in investing, so today I’m recommending selling two stocks that have recently broken down.