Yesterday’s New York Times Magazine brought the 8th Annual “Year in Ideas,” full of thought provoking, sometimes amusing, articles, patents and more.  One I found relevant to the current investing situation was the paper published by a team of Israeli scientists in the Journal of Economic Psychology earlier this year, titled “Action Bias Among Elite Soccer Goalkeepers: The Case of Penalty Kicks.”  The authors analyzed 286 penalty kicks and found that 94% of the time the goalies dived right or left; only 6% of the time did they stay in the center.  Yet the ball was stopped most frequently when the goalies stayed in the center!  So why all the diving?  Because to act is to look busy.  Because not to act is to appear helpless, as if they don’t know what to do.

And so it is in the stock market, for many people, both amateurs and experts.  They’re always looking to do something … but sometimes the best course of action is inaction.  A case in point is the Model Portfolio of our Cabot Market Letter, which editor Michael Cintolo has kept heavily in cash for most of 2008.  While the Dow is down 35% this year and the Nasdaq is down 43%, Cabot Market Letter has lost just 13%.  And I’m thrilled with that, and not just because we’ve avoided losing big bucks.  Today, while many investors are wondering whether to sell their losing stocks or hang on and hope for a bounce, the Model Portfolio has no losers!  Mike has the Letter sitting in cash while he coolly and calmly studies charts, working on identifying the potential leaders of the next bull market.  When they move, he’ll pounce, carrying no baggage from the bear market of 2008.  As a result, I’m expecting a very profitable 2009.