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Daily Archives: October 28, 2008

Nobody Knows Nothing

October 28, 2008
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I have this to say about the current investing climate, only slightly tongue-in-cheek. “Nobody Knows Nothing” I say this because history proves it, over and over.  For example, last week I pulled from my desk drawer a copy of the Wall Street Journal from Wednesday, May 23, 2007. It was not a particularly notable day.  The bull market was in force, and the Dow was hitting new highs … even though gasoline prices were at record levels.  But here at Cabot we had been noting a growing divergence in the market; both the NYSE Advance-Decline Line and the Nasdaq...

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Consumers are not Confident

October 28, 2008
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Well, it’s official, consumer confidence is at it’s lowest level since the Conference Board began tracking it in 1967. Consumer confidence plunged to 38 in October from a revised 61.4 in September, and was well below analysts’ expectations of 52. This certainly isn’t a shock, as we watched the stock market plummet throughout October, most horrifically during the week of October 6. Workers are getting laid off in larger numbers and while gasoline prices have fallen considerably, people are still afraid. A couple of weeks ago, Warren Buffett reminded us of his investing maxim: “Be fearful when others are...

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How to Invest Like a Pro

October 28, 2008
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I learned a lot about how hedge fund managers consistently make money in the stock market at the Value Investing Congress.  We have all heard about how hedge fund managers leverage their investments and take high risks to produce extraordinary returns, but most of the investors at the Congress use a conservative value approach.  Value hedge fund managers typically purchase large amounts of stock in a few small- to mid-size companies.  They establish a personal rapport with management, gain a seat on the Board of Directors, and urge management to make changes that will make the company more successful...

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