Taking a Trip Through Time

A Bit of Cabot History

This Stock’s No Gamble

Video: An Indecisive Market

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This week the folks in the Cabot office took a field trip down the road to Cabot Farm, where our company had its humble beginnings. We had a lovely lunch and got a tour of the grounds, complete with a stop to see alpacas, turkeys and a flourishing vegetable garden. We also got to visit with Cabot’s founder, Carlton Lutts, who lives on the Farm.

This trip got me thinking a lot about Cabot’s history and I wanted to share some of it with you because it’s unique and a good story. The following is taken from a new page on our website about the company’s history:

From one perspective, the Cabot history is one of business.

To begin, you could start with Henry Lovewell Lutts, born in Kittery, Maine, in 1849. He was a self-employed house builder by trade, and the houses on Lutts Avenue in Kittery stand as a reminder of his work. Later in life, Henry built houses in New Hampshire and Massachusetts, typically moving into one once the roof was on and selling it when he could move into his next one.

His second son was Carlton Gardner Lutts. Thanks to his father’s occupation, Carlton moved 26 times as a child. But he was bright! An inventor and entrepreneur; he started businesses making and selling jigsaw puzzles and chemically treated paper roses that forecast the weather. But those were just sidelines. Carlton was a metallurgist by trade; he worked at the Boston Naval Shipyard and had a patent on a method of chain manufacture that brought in royalties.

His wife, Grace Alberta Smith of Salem, had a “money mind” from the start. She bought her first house at age 19, with her own savings, over the objections of the bankers who were unaccustomed to dealing with single young women. She and Carlton had three children. And in 1941, at Grace’s urging, they used the chain patent royalties to buy the old Cabot Farm in Salem, a 28-acre property that currently is home to roughly 30 members of the Lutts family. Grace was a lifelong investor in stocks, favoring the buy-and-hold method.

Their second son, Carlton Gardner Lutts Jr., was trained as an engineer, but his love was the stock market. In 1970, driven by a desire to share his thoughts on stock selection and market timing, he began writing and publishing the Cabot Market Letter (named after the farm) on the proverbial kitchen table. As the years passed, his homespun wisdom and irrepressible passion helped hundreds of thousands of investors build big profits in great growth stocks like Fleetwood, WD-40, American Medical and Syntex.

Carlton’s second son, Robert, founded Cabot Money Management in 1983, to fulfill the demands of Cabot subscribers who had been asking for investment management services, and that business is thriving today, providing a full range of wealth management services to individuals and institutions.
Carlton’s first son, Timothy, joined the Cabot publishing business (by then incorporated as Cabot Heritage) in 1986 to contribute advice on investing in mutual funds, which were then enjoying a boom. As time went by, Timothy filled the Cabot stable with experts on value investing, international investing, Green investing, small-cap investing and more.

Carlton’s third son, Andrew, launched the Internet service company Net Atlantic in 1995, and today that successful company helps hundreds of organizations worldwide-including Cabot-communicate with their customers by email.

Meanwhile, at Cabot Heritage, Carlton and Timothy worked side-by-side for 18 years, transitioning the business into the digital age while remaining focused on the goal of serving subscribers with the best independent investment advice possible.

Carlton retired in 2004, but remains an advocate of growth stocks, momentum investing and market timing.

And Timothy heads Cabot Heritage today, supported by a loyal group of co-workers who are dedicated to providing investment advice you can trust, year after year, decade after decade.

(Tim’s daughter Chloe recently joined Cabot as well, as the editor of the Dick Davis Digest and Dick Davis Income Digest.)

I hope you enjoyed this bit of Cabot history. To see some more of the photos we took on the farm this week, check out our Facebook page!

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As you know, the market hasn’t exactly been cooperating lately. But I still managed to find a stock to tell you about today. It’s Las Vegas Sands (LVS), which has appeared in Cabot Top Ten Weekly eight times since 2006 and three in 2010 alone! Editor Michael Cintolo wrote this about it earlier this month:

“Las Vegas may get top billing in this company’s name, but its profit center is increasingly in the special administrative unit of Macao on the south coast of China. Like Hong Kong, Macao has a high degree of independence, and has emerged as one of the world’s gambling centers (and the only place in China where gambling is legal), providing Chinese high rollers with easy access to casinos like the Sands Macao, The Venetian Macao Resort Hotel and the Four Seasons Hotel Macao, Cotai Strip. The company’s Las Vegas properties (The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino and The Sands Expo and Convention Center) contributed just 24% of 2009 revenues, while the Venetian Macao kicked in 44% and the Sands Macao 22%, making it very clear which way the balance of power is shifting in the gambling world. On July 28, Las Vegas Sands booked an impressive 1,600% jump in earnings in Q2, on a 51% jump in revenue. After-tax profits hit 8.1%, which was double the Q1 rate. Everything seems to be breaking in the company’s direction just now, and the opening of a new casino in Singapore is expected to heat things up even more.

“LVS is a volatile stock, and any story with implications for the health of the global economy will move it around. The stock made a nice March-April run, soaring from 16 to 26. Then came three months of trading in wide swings, although both lows and highs continued to rise. The July 28 earnings report didn’t produce a huge breakout, but trading volume rose significantly and the stock subsequently ripped past its June high. A dip to 28 is likely, and would be a prudent buying opportunity.”

Since LVS was recommend in Cabot Top Ten Weekly in March, it’s up 61%! And the long-term potential for LVS is enormous.

Click here to learn more about Las Vegas Sands and other leading stocks featured in Cabot Top Ten Weekly.

In this week’s Stock Market Analysis Video, Cabot China & Emerging Markets Editor Paul Goodwin says we’ve been waiting for the market to declare itself but it hasn’t yet made a decisive move. Short-, intermediate- and long-term trends are all down, but not in a catastrophic way. Stocks discussed include VanceInfo Technologies (VIT), VMware (VMW), JinkoSolar (JKS) and MakeMyTrip (MMYT).

Watch the video!

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, I have links below to each issue.

Cabot Wealth Advisory 8/23/10 – Nine Stocks to Hold Forever

On Monday, Timothy Lutts wrote about the high cost of free parking and a possible solution to the problem. Tim also revisited an issue he wrote in July about a strategy of buying stocks and holding them for the very long term. Tim then discussed nine stocks that he and the other Cabot growth editors think are sound long-term investments. Featured stocks: American Superconductor (AMSC), Chipotle Mexican Grill (CMG), Ctrip (CTRP), First Solar (FLSR), Green Mountain Coffee Roasters (GMCR), Home Inns & Hotels Management (HMIN), MercadoLibre (MELI), STR Holdings (STRI) and VMware (VMW).

Cabot Wealth Advisory 8/24/10 – Rare Securities That Pay Hefty Yields

On Tuesday, we featured an article by Carla Pasternak about a special class of investments that pays high yields-business development companies-and the benefits of investing in them.

Cabot Wealth Advisory 8/26/10 – When to Sell Your Stocks

On Thursday, Paul Goodwin recapped his recent visit to the Grand Canyon, complete with a heart-warming story about parental devotion. Back on the investment track, Paul discussed the importance of sell disciplines, the current market situation and a Chinese stock for your Watch List. Featured stocks: China Valves Technology (CVVT), SinoHub (SIHI), Fuqi International (FUQI) and LJ International (JADE).

Until next time,

Elyse Andrews
Editor of Cabot Wealth Advisory


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