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Value Investing

A Word About Whipsaws

September 29, 2011
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I wanted to write briefly about some events that transpired in Cabot Market Letter during the past couple of weeks, and some feedback I got about them. As you know, the market put on a decent, but not great, show of strength a couple of weeks ago, and it was enough to flip our intermediate-term indicator (which simply follows the market’s trends) back to bullish. (It had been negative since August 2.)  In response to that, I advised subscribers to take a couple of small–emphasis on small–steps back into the market; we went from a huge 73% cash position...

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Top 10 Super Companies

September 24, 2011
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Top 10 Super Companies

My top 10 “super” companies listed below offer dividends averaging 2.5%, which exceed the current 10-year U.S. Treasury bond rate of 2.0%. In addition to generous dividend payments, investors can expect steady long-term earnings and dividend growth of more than 10% per year. All of the companies maintain strong balance sheets with low debt and lots of cash. Annual dividend increases are common for all of the companies and have averaged 16% annual increases during the past five years. The average dividend payout ratio for our 10 companies is 31%, which is well below our 50% to 60% limit....

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Do Not Scratch The Stock Will Hatch

September 24, 2011
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Do Not Scratch The Stock Will Hatch

Now for this week’s Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here. Do Not Scratch The Stock Will Hatch Cute. A simple plea to the value investor for patience. Of course, the button is true only if those stocks have been properly analyzed. Conditions can change, and value investors do sometimes need to reconsider and sell at a loss.

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The Importance of Dividends

September 22, 2011
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The Importance of Dividends

I often get asked if investing exclusively in dividend-paying companies will bring the best results. There is no simple answer, but history shows that dividend income is an important part of your total return when investing in common stocks. Increasing stock prices help build your wealth and beat inflation, but dividends provide a steady return on your investment through thick and thin. I also receive questions from investors asking me to compile a list of stocks to begin building their initial portfolios. Whether you are a new investor or an experienced pro, or whether you are young or old,...

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Dollar Store Stocks and a Weak Economy

September 20, 2011
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One stock that’s been popping up in a lot of newsletters recently is Dollar Tree (DLTR), a leading discount retailer. It’s not hard to see why; the stock just hit a new 52-week high, at a time when many other stocks are well off their peaks. The story here is simple: Dollar Tree owns and operates 4,101 discount stores with a wide variety of very cheap products, many priced at or around $1. According to an August 18 New York Times article, in the wake of the recession, these super discount stores are gaining newly frugal customers of all...

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