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How to Profit from Another Possible U.S. Debt Downgrade

November 1, 2011
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How to Profit from Another Possible U.S. Debt Downgrade

Back on August 5 after the market closed, Standard & Poor’s downgraded the United States debt rating from AAA to AA+. This was an important date for investors because the S&P 500 dropped the following Monday and Tuesday, establishing the lower rail of the trading range we were in from the beginning of August until recently. When the downgrade was announced, politicians were in an uproar. Republicans blamed President Obama and the Democrats for their spending. Meanwhile, the Democrats blamed Republicans and their insistence that taxes not be raised. Let’s face it, both parties are more a part of...

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Weighing the Evidence

September 27, 2011
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Weighing the Evidence

Last week, I had the opportunity to report for jury duty. (I know there are hundreds of jokes that can be inserted here, but I’ll spare you.) I was put in a jury pool for a burglary case and listened as the judge, the prosecutor and the defense attorney took turns asking questions of the potential jurors. In the end I was not selected to sit on the jury, but I learned something that I think can relate to the stock market. Because this was a criminal trial and not a civil trial, the defense attorney pointed out numerous...

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One Advantage of Options: Less Exposure

August 30, 2011
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One Advantage of Options: Less Exposure

My first article for Cabot Wealth Advisory appeared back on December 27, 2010. As the editor of Cabot Options Trader, I intended to educate subscribers about options–perhaps dispel a few myths and point out some of the advantages of options. One of the main appeals of options is that they provide the investor with leverage. A move of 5% to 10% on the underlying stock can easily generate a gain (or loss) of 80% to 100% on an option. And options allow investors to participate in the market with a smaller cash outlay. Here is what I wrote: “Options...

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The Strongest Stock in the Market?

June 9, 2011
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For my stock pick today, I’m turning toward the biotech sector, which has held up well during the market’s maelstrom. Granted, most of the time in the biotech world, all you can find is a lot of pipe dreams with stocks that are knee deep in clinical trials and only hope to launch a new drug candidate. I generally stay away from such firms, because they can fall apart in a hurry if the trials go awry or if a competitor jumps into the fray. So my stock pick today is … a small company with no sales and...

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Two Ways to Play the Current Trend Channels

June 7, 2011
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Two Ways to Play the Current Trend Channels

The sheer preponderance of technical analysis tools can generate enough information to overwhelm an investor. An old colleague of mine habitually perused so many different indicators before making a trade that he would get analysis paralysis. He looked at too much information and wanted everything to line up perfectly. If it didn’t, he would not make the trade. Sometimes, he had so much information that he just froze. Contrarily, I try to rely on a few indicators that I’m comfortable with and that produce good results for me. One particular pattern that I use are trend channels. Trend channels...

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