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Monthly Archives: September 2009

Take the Romantic Route to Investment Success

September 30, 2009
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Take the Romantic Route to Investment Success

I’m not sure who coined the phrase “Romance Stock.” It might have been my father; it might have been someone earlier.  In any event, it’s a phrase we’ve long found useful at Cabot, because it provides a model that helps us understand how stocks behave. To understand the model, you’ve first got to understand that what makes stocks move isn’t revenues or earnings or anything you can measure.  It’s simply the change in investors’ perception of the future. If investors as a whole are revising their opinion of a company’s prospects upward, then the stock will tend to rise. ...

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The Economist Who Made Your World Better

September 29, 2009
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The Economist Who Made Your World Better

It’s easy to give economists a hard time.  Like academics, it’s hard to figure out what they really do besides sit around and think about the economy.  They don’t run businesses or make anything useful.  Of course most big corporations have one on the payroll to look into the crystal ball and we all know that we need a few tame economists to deliver stern warnings during market bubbles and to run the Fed.  But can you name a single thing that an economist has ever done that actually benefits you? (I’m going to lay off the potential downside...

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Mindray Medical: Great Name, Good Stock

September 28, 2009
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Mindray Medical: Great Name, Good Stock

Every investment choice is a compromise.  Either you accept high risks in the hope of high gains, or you dial back your expectations and accept relatively small returns in exchange for increased safety. I don’t think there are any exceptions to this rule.  None.  And if there were, I’m betting that the SEC would probably want to have a nice, long chat with whoever found it. So my idea for today’s stock is a bit of a compromise.  It isn’t the hottest Chinese stock on the market.  But neither is it a boring Red Chip stock that you have...

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Tried and True Investing Rules

September 27, 2009
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Tried and True Investing Rules

In honor of the two-year anniversary of Cabot Small-Cap Confidential, I’ve been bringing you a multi-part series with Editor Thomas Garrity. Tom has explained how he got interested in small-cap stocks and where he thinks the market is going. Today he’ll reveal some of his tried and true investing rules. I hope you enjoy it! (You can read the previous issues here, here, here, here and here.) Question: What are your tried and true investing lessons and rules? Answer: I have a lot of investment rules, but two of the most important are: “Stick with it” and “Don’t be...

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The Law of Large Numbers

September 26, 2009
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The Law of Large Numbers

In honor of the two-year anniversary of Cabot Small-Cap Confidential, I’ve been bringing you a multi-part series with Editor Thomas Garrity.  Tom has explained how he got interested in small-cap stocks and where he thinks the market is going. Today he’ll discuss the Law of Large Numbers. I hope you enjoy it! (You can read the previous issues here, here, here and here.) Question: Why do you prefer to invest in small-cap stocks? What benefits do they offer investors? Answer: The obvious reason for investment in small- and micro-cap stocks would be that they have a proven and long...

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