American Consumers Are Spent
Who Are Your Fellow Investors?
In Case You Missed It
Warning: The following Cabot Wealth Advisory contains a rant.
After years of buying gadgets, cars and whole wardrobes on credit, the gravy train has stopped. Not only has it stopped, it’s derailed and is hurtling off of a cliff. Many people have locked up their purses and wallets, cut up their credit cards and stopped spending money. American consumers are spent.
Every day it seems we are bombarded with a slew of figures detailing the low level of consumer confidence and how this holiday season is going to be one of deep discounts and little buying. Already, the list of stores that are closing reads like a who’s who of chain retailers, like Circuit City and Linens-n-Things.
Many people are eating out less, forcing them to cook dinner and actually talk to their families. Some aren’t getting 900 channels on their televisions, so they’re playing games, going for walks or reading. Others are putting money into savings accounts, meaning that when they want to buy a gadget, car or clothes, they will be spending money they have actually earned.
How dare they!
The media would have you believe that this is a terrible thing. Maybe I’m old-fashioned, but I was taught to save, invest and live within my means. This means buying a house with a substantial down payment and not overextending credit. Apparently, I’m in the minority on this one.
Now, I certainly don’t want our economy to go up in flames or grind to a painful halt, but I can’t help but think that this reduction in spending is a good thing, at least in part. For years, many American consumers have made shopping into a hobby, some going to the mall weekly, or even daily, to purchase (mostly unneeded) stuff. I was beginning to worry that bargain hunting would become an Olympic sport.
So it’s only natural that eventually the tide would turn, that American consumers would put the brakes on and stop overspending. It makes sense that after years of living on credit and not saving a dime, many American consumers would stop, take stock of things and realize that such a lifestyle can’t be sustained indefinitely.
But things can go too far in the other direction just as easily. Not spending is not healthy for our economy, it will put people out of work and eventually the wheels of commerce will stop turning. While I might think that a return to a more conservative way of spending is a good thing, I wouldn’t advocate a total end to the modern age of consumerism.
What we need is to find a balance between overspending and not spending. Maybe a whole new wardrobe isn’t necessary every season, but having a few new pieces of clothing probably won’t break the bank. It’s striking that balance that’s going to help lead the U.S. economy out of the rut we’ve gotten it into, and, more important, keep us on a sustainable growth path going forward.
OK, rant over.
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Discover the Market’s Leading Stocks
Cabot’s proprietary screening software ferrets out the 10 strongest stocks each week, no matter what’s happening in the market. The Report routinely beats the market by finding strong leaders like these past picks:
In 2005, Hansen Natural gained a whopping 570%. In 2006, NutriSystem was up an amazing 480% in 11 months. Last year, stocks like JA Solar were up 200% in seven months, DryShips was up 510% in 10 months and Research in Motion was up 149% in seven months.
Even during this year’s bear market, Cabot Top Ten Report has found winners in stocks like Cleveland-Cliffs, which doubled in four months, Continental Resources, which rose 160% from its recommendation to its peak, and Walter Industries, which rocketed from 42 in January to 112 in early July.
During the last year and a half the average stock featured in Cabot Top Ten Report has produced 30% actualized gains, so click the link below to discover the strongest stocks in the market today.
We often survey our readers to find out how to serve you better and as part of this, we anonymously collect demographic information from you. We use this to find out what age groups are subscribing to which publications and how many of our subscribers are male versus female. I’m going to share some of the data with you to help you become better acquainted with your fellow investors.
I hope it gives you a better idea of who else is reading Cabot Wealth Advisory (and our other publications), visiting our Web site, http://www.cabot.net, and going to our blog, http://www.iconoclast-investor.com. Don’t hesitate to join them!
More people visit our Web site from New York than any other city in the world, with Toronto a close second. Eight of the top 20 cities that supply visitors to our Web site are from outside of the United States, with many concentrated in Canada.
Most of the visitors to our blog, The Iconoclast Investor, are from the United States, with Canada in second place, then the United Kingdom, India and Singapore. Australia, Germany, Belgium, Israel and Switzerland round out the top 10 list of countries supplying the most visitors to the blog.
For Cabot Wealth Advisory, 90% of our subscribers are between 35 and 79, with most concentrated between 50 and 64 years old. Sixty-seven percent of those subscribers are male, while 33% are female.
While Cabot Wealth Advisory readers tend to be a bit younger, 63.3% of Cabot Top Ten Report subscribers are over the age of 60. The largest group, 31.2%, is between 60 and 69 years of age.
Subscribers are interested in other investments besides stocks, with 81% in mutual funds, 45%, in ETFs, 37% in bonds, 45% in real estate, 16% in CDs, 6% in money market funds, 4% in options and 4% in some other type of investment.
Most Cabot Market Letter subscribers are over 50 and 92% of them are male, while 8% of them are female. Most of them have more than $500,000 invested in the stock market.
Seventy-one percent of Cabot Benjamin Graham Value Letter subscribers are between the ages of 50 and 69. But a significant portion, 18%, is between 40 and 49 years of age.
As you can see, we have a pretty good idea about who is reading our investment advisories, but there’s always room for improvement. Every issue of Cabot Wealth Advisory has a link to a survey at the bottom. Please feel free to take it at any time, and don’t forget to email us or comment on the blog with any questions, comments or suggestions.
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Invest Like the Oracle of Omaha
In a recent op-ed in The New York Times, Warren Buffett, laid out his plan to capitalize on the recent stock market crash. His mantra: “Be fearful when others are greedy, and be greedy when others are fearful.” It’s clear that right now, fear has reached a fever pitch. Buffett, one of the world’s most famous investors, isn’t predicting the short-term moves of the market, but he’s betting that in the long-term, the market will rebound and move significantly higher.
Buffett went on to say, “Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.”
Cabot Benjamin Graham Value Letter follows the system laid out by the father of value investing, who taught the system directly to Buffet when he was Graham’s student at Columbia University. Click the link below to start investing like the Oracle of Omaha.
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, we have links below to each issue.
Cabot Wealth Advisory 11/10/08 – The Battle to Save America’s Brains
On Monday, Timothy Lutts wrote about the battle to save America’s brains and how you can save yours and use it better for the greater good. Tim also wrote about his trip to India, where he is traveling right now. And he reached into the mailbag to pull out some letters from readers, primarily about health care. Featured stock: Cubist Pharmaceuticals (CBST).
Cabot Wealth Advisory 11/13/08 – The Intelligent Investor
On Thursday, J. Royden Ward wrote about his two approaches to value investing and how they were developed. Roy wrote about Benjamin Graham’s famous book, “The Intelligent Investor,” and how it shaped value investing. He also shared some insightful words of wisdom for investors.
Until next time,
Editor of Cabot Wealth Advisory
Editor’s Note: When the market’s as volatile as it’s been lately, I want to read as much as I can about what to do next. But there are only so many hours in the day. That’s why I turn to Dick Davis Digest to catch up on all the latest information from the best minds on Wall Street. Twice a month, the editors sift through more than 200 investment advisories to find the very best advice from the top minds in the business. It covers a wide range of investment vehicles that can help you get your portfolio back on track. Click the link below to learn more.