There are many types of investing strategies. Some investors like the relative safety of exchange-traded funds, while others prefer going toward small, low-priced stocks with high growth potential. It all depends on your tolerance for risk, which can change throughout your time as an investor. Contributor Elyse Andrews has a few suggestions below to help you get the most from your investments.

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Every morning when I look through Investor’s Business Daily, something in its pages catches my eye. It’s a little box, usually in the second section, that details How to Succeed with IBD. It inspired me to write How to Succeed with Cabot.

1.) Select a system. Our newsletters run the gamut of investing systems. From growth and value to options trading to emerging markets to energy; we cover a vast section of the investment landscape. It can be daunting, especially for new investors, to determine which system best suits them, but it’s a very important task. One way to help determine this is by taking our quick quiz:Which Cabot Letter is Right for You?

Read the rest in today’s Cabot Wealth Advisory.

Netflix (NFLX) stock surged 11.4% last Wednesday, on big volume, as the company released some encouraging data about its customers’ embrace of video streaming, stating, “More than 20 million subscribers worldwide watched more than two billion hours of old TV shows and movies on devices with high-speed Internet connections during the final three months of last year.”

On Thursday the stock paused, but on Friday it surged again, to its highest level in a month, on even greater volume.

And that raises the question, “Is it time to get back into Netflix?”

After all, the stock is 72% off its highs of mid-2011 when it alienated customers by raising prices and then goofed (big-time) by announcing and then cancelling a plan to separate its DVD-by-mail and video streaming business. Having lost $12 billion in valuation since then, Netflix looks cheap to a lot of investors; in fact some view it as a takeover target, citing Amazon (AMZN) and Yahoo (YHOO) as potential buyers.

Read the rest in today’s Cabot Wealth Advisory

I’ve learned a lot of things in the four years that I’ve worked at Cabot and that started the minute I walked in the door for my very first interview. Tim Lutts, Cabot’s president, showed me around the incredible building the office inhabits (it was once a library), ending at a very long-term chart of the stock market. He pointed out that despite setbacks, over time, the stock market has always gone up.

In my last column as editor of Cabot Wealth Advisory, I want to share with you some of the most important lessons I’ve learned here.

1.) Always be optimistic. From that very first talk with Tim, I knew he was a forward-looking and thinking individual. And his optimism became even more apparent during the financial crisis that swept through the markets in the year-and-a-half that followed. That’s not to say everything was rosy, but he never lost hope that the situation would turn around and made sure we didn’t either. And he was right! I never worked with Cabot’s founder Carlton Lutts, but from what I’ve heard, his optimism was boundless. I’m sure that’s where Tim learned it from and I’m so glad he passed this valuable lesson along to me. I now have faith that whatever dark days are ahead, they will end and even better things will come in their wake.

2.) Work should be fun. Cabot is a really enjoyable place to work. Every morning we take a 30-minute break for coffee (you can have tea or water too) and sit around a big table to talk. It’s a nice break from the computer screen and helps everyone in the office get to know each other on a personal level. We also get to go on fun outings (like mini-golf or a brewery tour) when we hit certain goals that we set at the beginning of every year. These trips are great ways for us to bond and feel like all of our hard work has paid off.

3.) Don’t succumb to groupthink. If you read the Weekend Digest regularly, you know that I always publish a button with a saying on it that teaches a lesson applicable to the market and life in general. Tim has been collecting these buttons for decades at the Contrary Opinion Forum in Vermont and has them arrayed in his cubicle where he can read them for daily inspiration. When I was in elementary school, I saw a banner that read “What is right is not always popular, but what is popular is not always right.” That stuck with me through the years and the same theme runs through a lot of what we talk about at Cabot. It’s important to be able to look at investor sentiment and recognize that when it’s at it’s worst, that usually means the market is about to turn around (and vice versa). It’s a difficult thing to do, going against the grain, but you’re almost always rewarded for it!

4.) Never stop learning. As I said at the beginning of this issue, I started learning things the minute I walked in the door for my very first interview at Cabot. Tim is a big proponent of continuing education in the sense that you should never stop learning new things. He reads several newspapers a day and is always interested in discovering something he wasn’t aware of before. I’ve always had a very curious mind (when I was younger, my brother would often implore me to stop asking so many questions … instead I became a journalist where I get to ask questions all day long!) and that attitude has been fostered here. I plan to keep learning as long as I can and I encourage you to as well.

5.) Take risks. Investing in the stock market is a risky business. Sure there are systems and indicators and strategies that can put the odds in your favor, but there’s always risk involved. So once you establish that the market trend is in your favor, do your research on a stock and decide how much of your portfolio to invest in it, dive in! I don’t usually think of myself as a big risk-taker, but in the last few years I’ve learned that sometimes taking a leap brings fantastic results. I often think of one of my favorite Henry David Thoreau quotes when I consider the benefits of taking a risk and it often motivates me to take the plunge: “If one advances confidently in the direction of his dreams, and endeavors to live the life which he has imagined, he will meet with a success unexpected in common hours.”—Henry David Thoreau

Since this is my last column, I want to thank you, our readers for checking in with me every Saturday and for your many emails containing invaluable feedback, advice and encouragement. I hope you keep learning along with everyone else at Cabot for years to come!

During our lunch, we discussed the market and how pathetic the volume has been for stocks lately. Our conversation turned to options and whether there had been the same kind of drop off in volume. This simple conversation sent me down a path that led me to some pretty staggering findings.

After doing searches for volume data from the New York Stock Exchange (NYSE) and the Chicago Board Options Exchange (CBOE), I discovered that there is a major shift happening in the way investors view and use options.

Let’s start by looking at the volume on the NYSE. From 2005 through 2008, the average annual volume on the NYSE grew by over 10% per year. After the bear market from 2008-2009, the annual volume declined each year, with 2010 volume declining 19% from the 2009 volume. For the 2011 numbers, I used the average monthly volume for the first 11 months to arrive at a total for December in order to get a full year of data. As we enter the final week of trading, we are looking at another double-digit percentage volume loss for 2011.

What this suggests is that the average investor hasn’t come back into stocks at the level they were before the bear market. After dealing with two bear markets in less than 10 years, perhaps the average investor’s confidence is shaken and this is keeping them out of the market.

The next step was to look at the annual volume on the CBOE. Options trading grew by huge percentages from 2005-2008, with an average annual growth rate of 35% over the previous year. However, rather than declining sharply in the last three years, options volume declined by a much smaller percentage than stocks.

I have been trying to tell people for a number of years that options present a way for investors to participate in the market’s movements with far less money tied up in the market. Perhaps investors are starting to realize this and so options volume has been relatively stable over the last three years.

The final step in my analysis was to take the options volume and multiply it by 100 because each option represents 100 shares of the underlying stock. After taking this step, I looked at the options trades as a percentage of the stock trades. For instance, in 2004 there were 369.6 billion shares of stock traded on the NYSE, while 361 million options contracts were traded on the CBOE. In this case, the option volume multiplied by 100 came out to 36 billion shares of stock represented. The math from there is pretty easy as 36 billion is just under 10% of 369 billion. In other words, the amount of stock represented by options traded on the CBOE was approximately 10% of the NYSE’s stock volume.

So options trading grew faster than stock trading from 2005-2008 and then didn’t drop off as much in the last three years.

From the table above we see that the amount of stock represented by the options traded on the CBOE has increased sharply as a percentage of the stock traded on the NYSE. The number of shares controlled by options was just under 10% in 2004; in 2011, it’s estimated to be just under 30%.

Whether it is Main Street or Wall Street, investors have discovered that options present opportunities and strategies not available with stocks alone. With options, you can lower your total dollar exposure, but still participate in the market’s movements. You can use covered call strategies to add income to your portfolio or you can buy protective puts as insurance for your portfolio. But the view that options are only for risk takers is definitely changing and services like the Cabot Options Trader are becoming more sought out by investors. It has been 21 years since I made my first options trade and now more and more investors are realizing how options can play a part in their portfolio. It’s about time.

Editor’s Note: Don’t let the market’s volatility keep you out of investing. Use Rick Pendergraft’s Cabot Options Trader recommendations to make money in all markets … with less risk! Instead of missing out on winning trades, he uses the market’s volatility to his advantage and profits when most investors sit on the sidelines. Try a risk-free trial today!