Be Flexible
A Hot Stock
Patience is Sustained Courage
Stock Market Video
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A few weeks ago, I was visiting my parents in New Hampshire for Father’s Day and we reminisced about some of the advice they’ve given my brother and me over the years. Then my dad remembered a little piece of advice I gave him nearly two decades ago, when I was a mere 10 years old: “Be flexible!”
Now, this advice was not unsolicited at the time. My dad had recently signed up to coach my Odyssey of the Mind (OM) team and wanted to know whether there was anything he should be aware of before we got started (I was considered a pro, having participated before).
Briefly, OM is a competitive program that puts students on teams that work for several months to solve one of the problems the organization released that year. The teams then present their solutions at a competition. OM encourages students to think creatively while problem solving and working as a team.
I can’t remember exactly our problem, but I know that my team wrote and acted out an anti-drug skit. We had a great time working together and ended up winning our local competition!
We lost during the state round and I still blame that partly on protests at New York’s Binghamton University campus, where the competition was held. The protests were over then-Governor George Pataki’s proposal to raise state college tuition and his daughter happened to be performing in the room right before us. It was nerve-racking, to say the least.
We eventually got over being caught in a sea of angry college students, but I’ve never quite lived down the advice I gave my dad. This is probably because I tend not to be the most flexible person in town.
While my remark has haunted me for nearly two decades, it’s also provided a great reminder of how I strive to live my life ... and how you should invest!
Staying flexible is a key component of investing successfully, especially in times like the present when the market seems as if it will to go one way and then goes the other. At Cabot, we don’t believe in trying to predict the market’s movements. Instead, we watch the market and heed it’s message.
Sounds simple, but it’s actually not always easy to be patient with the market’s movements.
After a few good days in the market, like we saw on-and-off during the last two weeks, it’s tempting to want to dive into the top stocks on your watch list. But waiting for true confirmation of an uptrend (i.e., our market timing indicators giving us the green light) will save you from getting whipsawed right back out of the market if the trend doesn’t hold up.
However, you want to be ready to jump into those top watch list stocks if the uptrend is confirmed. That means staying nimble, like going into cash when the market sours, so you’re ready to buy into some potential winners when the uptrend resumes.
So as the market seesaws here, stay flexible. Don’t hold on too tightly to what you think the market will do, just follow what it actually does. A good lesson to remember in investing ... and life.
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Speaking of good stocks for your watch list, I’ve got one for you today. It’s Buffalo Wild Wings (BWLD), a chain sports bar/restaurant that recently opened a location near the Cabot offices. I haven’t been yet, but I’ve heard good things about their wings.
Here’s what Cabot Top Ten Trader Editor Mike Cintolo had to say in a recent issue:
“When Buffalo Wild Wings made the last of its seven appearances in Cabot Top Ten Trader back in January 2010, this sports bar/quick casual restaurant chain had about 560 locations in 38 states. The thesis then was that the company wanted to be the premier sports bar chain in America, combining fun food (traditional wings, boneless wings, popcorn shrimp, etc.) with lots of sports on television. Today, you can find 735 Buffalo Wild Wings Grill & Bar restaurants in 45 states and the company opened its first location in Canada in May, with 50 additional Canadian locations projected within five years. It’s a solid business plan, with a standardized template for each location. Earnings were up 40% in Q1 on a 20% jump in revenues. It’s not a bad record for a couple of guys in Ohio who founded the company in 1982 out of nostalgia for the wings they used to enjoy in Buffalo, New York. Institutional sponsorship gives a seal of approval, with the number of whales on board up to 320 now.
“BWLD snoozed through most of 2010, inching up from 40 to 44, despite some big volatility. The breakout came in February, when the stock gapped up from 47 to 53 on huge volume. The stock consolidated for eight weeks, then soared again in April, nudging 64 in May. Now, a steep correction earlier this month has given way to a new run past 64 on slightly elevated volume. The franchise logic of BWLD looks to be getting more traction. Try to buy on a drop of a point or two.”
You could buy BWLD here and hope for the best, or you could check out the latest issue of Cabot Top Ten Trader for Mike’s current recommendation on this and other leading stocks.
And don’t forget, for this weekend only, you can subscribe to Cabot Top Ten Trader for the low price of only $94 for one year. But hurry, this offer expires on Monday, July 4 at midnight. Order now!
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Now for today’s Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here.
Patience Is Sustained Courage
Found in the book Speculation as a Fine Art and Thoughts on Life by Dickson G. Watts, this quote transforms patience from a passive enterprise to an active one ... and thus endows patience with a greater respectability. To an investor, patience can often be extremely valuable. In bull markets, you want to hold your winners, so your profits compound. In bear markets, you want to keep some cash patiently on the sidelines, waiting for conditions that are supportive. And sometimes, you just want to sit and watch a stock for a while, to see if it behaves the way your analysis tells you it will.
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In this week’s Stock Market Video, Cabot Top Ten Trader Editor Mike Cintolo discusses the market’s excellent week, but cautions that we still don’t have a buy signal yet from our market timing indicators. He says that we could see a double-bottom scenario here and warns that getting back getting into the market too soon could be a costly mistake. A lot of stocks have been chopping around, so take it slow until you know if the new trend is confirmed. Stocks discussed: Lululemon Athletica (LULU), GT Solar (SOLR), Under Armour (UA), Intuitive Surgical (ISRG), Illumina (ILMN) and Biogen (BIIB). Click here to watch the video!
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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 6/27/11 - How to Compare Growth Stocks
On Monday, Cabot Publisher Tim Lutts lamented our culture’s increased fascination with entertainment and sports and lack of interest in reading and learning. Tim also discussed why you shouldn’t just rely on companies’ earnings estimates to compare growth stocks and the importance of looking at the whole picture before deciding to invest in a stock. Featured stocks: Nike (NKE), Under Armour (UA), Lululemon Athletica (LULU), Cisco (CSCO), Fortinet (FTNT), Amazon.com (AMZN), Complete Genomics (GNOM) and Craft Brewers Alliance (HOOK).
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Cabot Wealth Advisory 6/28/11 - The Stock Market is Not the Economy
On Tuesday, Dick Davis Digest Editor Chloe Lutts discussed the importance of separating the stock market from the economy and vice versa. Chloe discussed the pessimism among Digest contributors (and regular Americans) about the U.S. economy and some stocks that might do well even in a slow economy. Featured stocks: Ross Stores (ROST) and AutoZone (AZO).
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Cabot Wealth Advisory 6/30/11 - Good Chemistry in Brazil
On Thursday, Cabot China & Emerging Markets Report Editor Paul Goodwin provided three clear-eyed perspectives on the issue of outsourcing jobs, which is sure to be a favorite topic of politicians as we enter election season. Paul also discussed why it’s important to wait for our market timing indicators to confirm an uptrend before jumping back into the market, as well as a Brazilian stock that pays a handsome dividend. Featured stock: Braskem (BAK).
Until next time,
Elyse Andrews
Editor of Cabot Wealth Advisory
P.S. Have you connected with Cabot on Facebook? Click here to visit our page, which contains exclusive content, like coverage of our recent energy investing webinar!