Two weeks ago, many of our Cabot Wealth Advisory readers kindly filled out a survey and, in doing so, asked several great investing questions, some of which I’m going to tackle today. Please feel free to send us any other questions, comments or suggestions you might have in the comments section below.
Question: What are some low-risk strategies that I can employ during a market downturn?
Answer: At Cabot, most of our editors practice a system of growth investing that uses market timing to determine when to stay in the market and when to get out. So our advice for a safe investment during market downturns is, for the most part, to stay in cash. Cabot Tides, the primary market timing indicator for our growth newsletters, gave us a sell signal early last fall and we recommended subscribers move to cash by the time the market crashed, leaving their capital preserved to invest in the next bull market.
Cabot Benjamin Graham Value Letter is a low-risk option for conservative investors. Our value-investing newsletter stays fully invested in high-quality companies and bonds that are priced below their intrinsic value in all market conditions. Cabot Benjamin Graham Value Letter Editor J. Royden Ward incorporates an allocation of bonds into subscribers’ portfolios.
Question: Do you recommend any high-yield investments?
Answer: Yes, Cabot publishes Income Digest, which recommends dozens of high-yielding investments each month, including income stocks, bonds, mutual funds and ETFs. Our investment expert selects the very best income investments from hundreds of newsletters to include in each issue. These are the top income investment ideas from the best minds on Wall Street. Here’s an example of one recommendation from a recent issue:
“The pressure is on U.S. automakers to build vehicles that are more fuel efficient. Plug-in electric hybrids are the focus of efforts to achieve that goal. Cars like the Chevy Volt will be able to plug in to a local power source and recharge. The winners here will be electric utilities. Auto manufacturers will make do with the help of subsidies. Taxpayers will be forced to provide those subsidies. Car buyers will have to forgo frills like comfort, cargo space and safety. These plug-in hybrids will need new infrastructure to support them. Outlets for recharging will need to be placed in strategic locations like parking lots, existing gas stations and even driveways. This extension of the existing power grid will generate a regulated monopoly return for utilities like Black Hills Corp. (BKH 22.63 NYQ – yield 6.30%). My relative-strength chart shows that Black Hills outperformed the S&P 500 in 2H08.” Richard C. Young, Intelligence Report, www.intelligencereport.com,
800-301-8968, 12 issues, 2/09
Question: What investments will benefit from the economic stimulus package?
Answer: Two words: Green investments. The economic stimulus package, which was recently signed into law, is going to flood the Green sector with $76 billion, leading to a boost for many companies in this area. President Barack Obama has stated many times that he wants to push Green initiatives, and the stimulus is one way he’s going to be able to do that.
Cabot Green Investor Editor Brendan Coffey sees great things coming down the pipeline for the Green sector as the stimulus begins to take effect. The stimulus will likely benefit several areas of Green, everything from weatherizing homes and cleaning up nuclear weapon production sites to smart electricity and loans for renewable energy projects. There will also be funds for clean energy grants and to make federal buildings more energy efficient.
Another big chunk of money in the economic stimulus package for infrastructure projects could arguably go toward Green, with some of it slated for mass transit and clean water projects. Brendan told his readers to expect more stock market response as it becomes clearer which Green companies will be the big winners.
Question: I want to know more about Green investments. Can you help me?
Answer: Yes, we can! Lately it seems everyone has been talking about Green; from energy to fertilizer, and everything in between, there’s no denying that a revolution is taking place. Cabot Green Investor is the place to find out about fast-growing, earth-friendly investments. All of Cabot’s time-tested growth stock criteria are applied to the stocks in the newsletter to ensure that you are investing in the most promising stocks in this high-potential sector. Brendan Coffey, a veteran financial writer, is the analyst and editor of Cabot Green Investor.