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Is Being Thin a Bad Thing?

August 27, 2008
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Here’s question and answer number three in the frequently asked investing questions series. Read the posts from the previous two days to see what you’ve missed and check back all week for more Q&A. Question: You talk about a stock trading “thinly.”  What does this mean?  And why is it a bad thing? Answer: Thinness refers to how many shares, or how much dollar volume, a stock trades each day.  For our purposes, we consider any stock that trades less than 500,000 shares per day to be relatively thin. Being thin isn’t bad, per se, but it usually means...

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Practicing Offensive Selling

August 26, 2008
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Here’s question number two in the frequently asked investing questions series. Check back all week to read more. Question: In Cabot Top Ten Report, I noticed you sold XYZ stock, yet the shares are acting fine.  Why did you sell out? Answer: In recent years, especially in tricky environments like now, we’ve been doing more offensive selling–i.e., selling some shares on the way up.  And sometimes, we’ll just sell the whole thing. My experience tells me that investors don’t like to sell.  They don’t like to sell winners because they’re performing well.  And they don’t like to sell losers...

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Answers to Frequently Asked Investing Questions

August 25, 2008
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We spend a lot of time each week answering questions from our readers and some of them come up so often that I wanted to share them with everyone. So each day this week, I’ll be posting a frequently asked investing question, and of course, the answer. Here goes … Question: Do you believe this bear market has any chance of being like 2000-2002?  If not, why not? Answer: I joined Cabot in June 1999, and since then, I’ve seen a dramatic bubble, a tremendous decline, a multi-year recovery, and lastly, the current bear market. So I know that...

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Short Stocks During Bear Markets?

August 21, 2008
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I recently got asked a question that comes up often and I wanted to share it (and the answer) with you. Question: Why don’t you short stocks in your newsletters?  Seems like it would be a good way to make some money during bear markets. Answer: We have nothing against shorting, but most investors don’t realize that making money on the short side is MUCH more difficult than making money on the long side. Why?  Because fear is a more intense emotion than greed; when a stock declines, it happens quicker than when it rises.  And that means your...

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The Bulls Are Back in Retail

August 12, 2008
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The Bulls Are Back in Retail

Energy prices down, retail stocks up.  Goes together like America and apple pie. As oil and unleaded gasoline have fallen more than 20% since peaking four weeks ago, money has been moving into many retail names.  But what caught my eye was the monstrous volume seen in many retail chains on Monday, August 11.  Just check out the charts below of Kohl’s (KSS), Home Depot (HD) and Gap (GPS)– in particular, notice the gigantic volume that flowed into these stocks on Monday.  Many other big retailers are experiencing similar action. All three stocks burst above their 200-day moving averages,...

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