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Seasonal Investing

August 29, 2008
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Here’s question number five in the frequently asked investing questions series. As a bonus, we’ll answer one more question on Monday. Question: I know that August, September and October are three of the worst months in the stock market.  Does that mean we’re likely to stay in the dumps until the end of the year? Answer: We’re not huge fans of seasonality.  It’s true that, over time, the market has done most of its good work between November and April.  But that’s just an average.  Some years it does, some years it doesn’t. Last October, for instance, wasn’t a...

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I Want Action

August 28, 2008
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I’m concerned about the lack of progress made by our elected officials in Washington on the major issues of the day.  Where are the solutions for our energy crisis, social security funding or a cost efficient health care system?  We have been patiently waiting for decades to solve each of these, and other, problems.  Has our democratic way of living broken down and become obsolete?  Do our decision makers place party politics and getting votes in front of patriotism and doing what is right for America and its citizens? No, the system isn’t broken, and no, we don’t need...

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Two for One

August 28, 2008
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Today we have two frequently asked investing questions for you. Enjoy! Question: What would you say is your most successful fundamental stock-picking criteria? Answer: If I had to pick just one, it would be triple-digit revenue growth.  Companies that are growing that fast, especially if it’s because of a new product or service, often turn into big market winners.  It’s important to make sure the 100%+ revenue growth is happening because of internal growth, not because of acquisitions. If I had to pick one other, it would be a new revolutionary product, like Apple’s iPod, Crocs’ croslite shoes, Google’s...

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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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