In this week’s Stock Market Video, Mike Cintolo reviews three different “blast-off” indicators that have recently triggered, which bodes well for continued gains in the months ahead. He also reviews a wide swath of potential buys, some on pullbacks, some on earnings gaps and some on breakouts. Stocks mentioned include: Pioneer Natural Resources (PXD), Cree Inc. (CREE), LinkedIn (LNKD), Oasis Petroleum (OAS) and Ford Motor (F). Click here to watch the video!
Forecasting the Future of the Stock Market
You have to admit that stock markets are riding a nice set of economic waves these days. The economy of China is solidifying its recovery. The U.S. economy has been strengthening very slowly, but very steadily. And even Europe is showing signs of getting back on the growth track, with Germany’s IFO Index of business confidence at its highest levels in seven months and the DAX stock exchange is at a five-year high.
I say “you have to admit” with a bit of
rueful smile, because I know there are lots of people who are dead set against admitting anything positive at all. There are people who are so focused on the U.S. deficits or the social policies of Europe or the Communism of China that they absolutely refuse to see any blue in the sky at all.
(I have no illusions that my rational optimism is the absolute, carved-in-granite truth. There’s plenty of room for intelligent dissent. If you want to listen to two very smart people with very different opinions about the future of China, you can click on this link to a PBS program.
My point today is that you don’t really have to be optimistic about the future to take advantage of the strength of today’s stock markets. That’s because optimism (or pessimism) is about your attitude toward the future.
And the future of the market is as much a closed book to me as it is to the high-powered economists and market gurus who are so eager to deliver their opinions on every website and cable channel.
All you need to know is that markets are in an uptrend right now. And you know this because the major indexes are all above their trailing 25- and 50-day moving averages and those averages are all trending up.
So, while you can worry all you want about the future and argue with the prognosticators and crystal ball gazers who don’t agree with your pessimism (or your optimism), but you absolutely cannot—repeat, cannot—argue that this isn’t a bull market. It just is. Period.
And just as you can’t play ice hockey without ice, and you can’t play basketball without a ball, you can’t invest in a bull market unless the market is going up. And it is.
So every day that you spend worrying about what might happen, you’re losing the enormous opportunity presented by what’s actually happening.
Cabot growth disciplines don’t recommend diving right into the deep end of the pool all at once. We typically put a small amount of money to work and then increase our exposure as our investments increase in profitability.
And when the correction that so many people keep obsessing about finally arrives, we will take our profits, go back to a heavy cash position and wait patiently for the next bull market to arrive.
But we certainly won’t waste this one.
If you’d like some well-written assistance from experienced advisors, you can, of course, subscribe to Cabot Market Letter or one of Cabot’s other growth letters.
The sun is shining. Make hay.
Here’s this week’s Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here.
Avoid the Tyranny of Inflated Expectations
Tim’s Comment: It’s OK to dream; just don’t expect your dreams to always come true. If you start with realistic, reasonable expectations, chances are good you will achieve your goals. If you let your wildest dreams dictate your actions, you’ll be forced into unwise actions. Chasing rainbows brings only disappointment.
Paul’s Comment: There are two loaded words here, “tyranny” and “inflated.” My reading of this button is that it’s warning against having goals that are so unreasonable that they make you make bad decisions. Ambition and goals are fine things, but if they’re “inflated,” they can turn into tyrants. So the button could actually read: “Set reasonable goals,” but that wouldn’t be as dramatic.
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In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.
Editor Tim Lutts of Cabot Stock of the Month uses this issue to examine the odds that Apple (AAPL) is going the way of past market leaders. He advises looking for the next leader, not buying the old one. The fifth of his “10 Stocks to Hold Forever” is F5 Networks (FFIV).
Robin Carpenter of Cabot ETF Investing System writes about the arcane art of portfolio optimization and explains a slightly simplified way to achieve it. His explanation gives further insight into his approach to risk control.
In this issue, value expert Roy Ward of Cabot Benjamin Graham Value Letter extols dividends as a way to validate the health of a company; a long history of good dividends a healthy enterprise. Stocks discussed: Dover Corp. (DOV) and Family Dollar Stores (FDO).
Editor of Cabot China & Emerging Markets Report
and Cabot Wealth Advisory