Stock Market Video
An Unexpected Emerging Market Takes Off
This Weeks Fortune Cookie
In Case You Missed It
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In this week’s Stock Market Video, Mike Cintolo talks about the strengthening market. From a top-down perspective, there’s little to complain about, as the major indexes have acted very well following the early-October buy signal. Individual stocks, however, have been very tricky—defensive stocks are being bought while many potential leading stocks continue to meander. Friday brought some breakouts, though, and Mike presents his list of set-ups should more leaders begin to lift off. Click below to watch the video.
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An Unexpected Emerging Market Takes Off
Every investor has a part of the market that they’re familiar with and comfortable in, although some comfort zones are wider than others. Some people naturally migrate toward the stocks in the Dow Jones Industrial Average and others enjoy the fast-moving action of the over-the-counter (OTC) jungle. But whether it’s municipal bonds, bond straddles and strangles, high-tech NASDAQ high fliers or commodities ETFs, there’s a kind of natural attraction that draws investors into certain markets.
When I started writing about emerging markets, if I mentioned emerging markets to most investors, I get a polite, blank stare. And even among those who knew a little bit about emerging markets, suggesting that they actually buy a Chinese (or Indian or Russian) stock got the kind of reaction you see when someone bites into an apple and finds a worm … or, even worse, half a worm.
But that reaction passed quickly when the BRIC stocks (Brazil, Russia, India and China) began climbing the charts. These countries had huge economies, cheap labor, massive natural resources and budding companies that were bringing industrialization, technology and a consumer culture to billions of people.
These days, two of the four BRIC countries (Brazil and Russia) have hit a brick wall and China’s economy is in the headlines every day only because of its many challenges.
So, naturally, I’m worried that I’m going to start getting the blank stares from investors again.
Fortunately, the BRICs aren’t all there is to the emerging markets universe. And when one group hits the rapids, there is frequently another group that’s enjoying calm waters.
Right now, one bright spot in the emerging markets is Mexico, and there’s one company that will help to explain why emerging markets stocks are such attractive targets for investors who can expand their investing comfort zones a bit.
Here’s what I had to say about a company named Volaris in the July 30 issue of Cabot Global Stocks Explorer (formerly Cabot Emerging Markets Investor).
Volaris is now trading at about 17.5, and is enjoying both the low fuel costs that are benefiting all airlines plus the added advantage of operating in a country that’s bringing air travel to a newly capable generation of airline travelers. Here’s a chart of what VLRS has done in the past year.
The real takeaway of a stock like Volaris is that emerging markets are diverse and full of surprises. When the BRICs are down, Mexico (or some other country) can be up. In fact, right now my market timing system for emerging markets as a whole is positive despite all the negative news.
I’ve been the Chief Analyst of Cabot Global Stocks Explorer for about 10 years, and you might think that I’ve seen it all. That time has encompassed the bursting of the U.S. debt bubble in 2008 and the Great Recession that followed. I’ve guided my readers through the rocketing Chinese bull market of 2006 and 2007 and steered them clear of extended bear phases, preserving capital in anticipation of the next bull period.
If you have room in your comfort zone for carefully selected stocks from unexpected places around the world, I think a trial subscription to my Cabot Global Stocks Explorer can do you a world of good. Get more details here.
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Here’s this week’s Fortune Cookie. Remember, you can always view all previous Contrary Opinion buttons here.
“Scratch a pessimist and you find often a defender of privilege.”—William Beveridge
Tim’s comment: Beveridge was a British economist, best known for his work on social security that served as the basis for the welfare state put in place in England after 1945—so he knew a bit about the challenges of changing entrenched attitudes. In investing, the ability to embrace change is a key attribute of success; in fact, it’s what enables those without privilege to become wealthy!
Paul’s comment: Beveridge’s little observation can be taken a number of ways; here’s mine. Rich people have more to lose, so they worry more. And when you have a lot to lose, everything looks like a threat. On the other hand, if Beveridge, who was a Brit, was talking about the British class system when he says “privilege,” then all bets are off.
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In case you didn’t get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, there are links below to each issue.
Cabot Wealth Advisory 10/19/15 – One Thing You Can Do to Worry Less About Retirement
Cabot Dividend Investor’s Chief Analyst Chloe Lutts Jensen writes about how knowing exactly what’s going on in your retirement accounts can reduce your anxiety about retiring. Chloe also mentions Cabot’s new retirement investing handbook called A Richer Requirement.
Cabot Wealth Advisory 10/20/15 – Are Commodities a Buy?
Tim Lutts, Chief Analysts of Cabot Stock of the Month, ruminates a bit on artist Rockwell Kent. Tim also looks at whether commodities, which have been beaten down for a while, are worth buying now. Stock discussed: Zillow Group (ZG) and United Technologies (UTX).
Cabot Wealth Advisory 10/22/15 – An Unprecedented Market? Hardly.
Cabot Growth Investor’s Chief Analyst, Mike Cintolo, dips into the history of the 1987 Black Monday stock crash to show that there’s nothing really new in the stock market. Mike says, “Plan your trades and trade your plan.” Stock discussed: Adobe Systems (ADBE).
Sincerely,
Paul Goodwin
Chief Analyst of Cabot Global Stocks Explorer
and Editor of Cabot Wealth Advisory
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