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Last Monday marked a special day for us at Cabot: The 39th anniversary of the first issue of Cabot Market Letter, our flagship newsletter. In honor of this anniversary, I’ve interviewed Timothy Lutts, Cabot’s publisher and Cabot Market Letter’s current steward, Michael Cintolo. I brought you Tim’s interview last week (you can read it here: http://www.cabot.net/Issues/CWA/Archives/2009/10/Look-Back-at-CML.aspx) and it generated some nice comments that I want to share with you today before jumping into the first part of Mike’s Q&A. Enjoy!
(Please send us your comments on the anniversary of Cabot Market Letter by replying to this email. We’d love to hear from you and you just might see your comment show up here.)
“Hello everyone! Just wanted to thank you for the recent advisory, and of course all else that you do. I’ve been a subscriber for about 20 years, and really enjoyed reading about the history! I was a really wet-behind-the-ears investor when I began reading Carlton’s work, and have appreciated your insight all these years. My first big wins were Summit and American Power Conversion; so thanks for the memories! What a cool story about the family farm. Take care and THANKS again!”
“This is a great letter, I first subscribed sometime in the early ’90s when a friend of mine first told me about it. I was working at Dean Witter and he was also a customer.
My favorite stock story is when I first heard about the BreathRight strips. I was going to Colorado to snow ski every year and the whole time I was out there I would have trouble with my sinuses especially at night trying to sleep. I would wake up every night because I couldn’t breath thru my nose. After hearing about these strips I took some with me and used them at night. They would allow me to sleep all night without stopping completely up so each year when we go skiing I take a weeks supply. They work great. I also invested in the stock after that and made some good money until the market became flooded.
Olive Branch, Mississippi
Now on to today’s Q&A with Cabot Market Letter Editor Michael Cintolo …
1.) How did you come to work at Cabot?
Interestingly enough, while I’ve been working for Cabot for more than 10 years now, I’ve actually been part of the Cabot family even longer. My Dad subscribed to Cabot Market Letter back when I was finishing up high school; at the time, I was learning about mutual funds and such, as this was when the market was just beginning to heat up in the mid-1990s. And when I began reading the Market Letter, I was fascinated by the stock market.
I went to college as an engineering major, but I realized pretty quickly that it wasn’t for me so I decided to hone in on finance and economics, though my passion was stocks. I started a free, informal email newsletter for friends and family. And most important, I began to regularly email Timothy Lutts with questions and inquiries about this stock or that indicator. I actually visited the Cabot office one summer day, had lunch, and saw the operation.
When graduation time came, I wasn’t totally sure what I was going to do. I remember having an interview with Goldman Sachs down in New York City–I think it was for an analyst position. Nothing against those guys, because I know it’s good work, but I saw this fellow staring at his computer monitor, building a detailed model of Abercrombie’s business and balance sheet. Meanwhile, this was the day Amazon.com was up 40 points on an upgrade–Cabot Market Letter owned it at the time–and all I could think about was, “How is that spreadsheet really going to help anyone make money?” I couldn’t see myself doing that for years and years.
Just when I was trying to decide what my career path should be, Tim shot me an email and asked if I would come in for an interview. Cabot was starting a new publication (Internet Stock of the Week) and wanted to see whether I could help write it. Apparently I did well enough–I joined the team a couple of weeks later and the rest is history.
Incidentally, I think having been a subscriber, then an analyst here, and now editor of Cabot Market Letter, helps me relate well to what most subscribers want and feel throughout a market cycle. Hopefully that makes for a better newsletter, to go along with good recommendations.
2.) How do you feel about being the current steward of CML?
I have to say, to go from reading Cabot Market Letter just over a decade ago, to running it now, puts a smile on my face. It’s really an honor. Obviously I’m biased, but I do believe our publications are the best out there, in terms of advice and relaying information in down-to-earth terms. So to be guiding the Market Letter is really a thrill.
As for the job itself, like any job that deals with the stock market everyday, it’s a huge challenge. There are countless days when you’re frustrated and feel like you’re out of sync with the market. But we have a great stock selection and market timing system at Cabot, so I’m always confident any dry spell will give way to sunnier days. Plus, the highs are much greater; helping subscribers make good money–and equally important, hold on to those profits–which is very rewarding. I’m just trying to stay humble and keep picking some good stocks.
3.) What are some of the most important lessons Carlton Lutts taught you?
I believe strongly that, while every person is unique, there are a few people you meet in your lifetime that are truly special. Carlton Lutts is one of those people.
He really taught me the value of optimism–we used to joke that his favorite phrase was “Frequently Wrong … Never in Doubt!” But seriously, his optimism was really a confidence in the future, of our country, of our company, and of the stock market. So I would say the biggest lesson he taught me was simply the value of staying positive and realizing that no matter how bad things may seem, there are brighter days ahead.
In terms of investing, Carlton had a great ability to think big. Whereas many investors, including myself from time to time, fall into the trap of putting limits on their successes (i.e., selling winning stocks for 10% or 15% gains), Carlton was always open to the possibility that a stock could double, triple, or more–after all, if you don’t give a stock a chance to double, you’ll never have one. That’s the biggest reason he was able to uncover so many huge winners.
4.) What is your favorite investing story?
My favorite investment story was also from Carlton. This was back in the 1960s, I believe after the Cuban Missile Crisis, and he was actually living in France at the time for work. He ended buying both Chrysler and a competitor’s stock (I forget the name), and told his broker to buy a little more of each stock anytime they rose a few points to a new high.
Of course, this was back in the days before online trading and email confirmations. After a couple of weeks, he got a confirmation in the mail that he bought some more Chrysler. Then he got another. And another! In all, over many months, he ended up buying Chrysler 22 different times as it worked its way up! It sounds risky, but this is really intelligently averaging up, and when it works, it works spectacularly. Chrysler was one of Carlton’s all-time biggest winners.
Incidentally, I don’t believe he ever bought any more of the competitor’s stock because it didn’t go anywhere! So Carlton was right to force-feed more money into his winner, while he soon got rid of the laggard.
5.) What improvements have occurred with Cabot Market Letter since you joined Cabot that you are most proud of?
I would say it involves our market timing system. Back in 1999 and 2000, like so many others, our market timing system had decayed; after all, for 20 years, any market pullback led relatively quickly to higher prices, so why did anyone need market timing? Thus, when the bear market hit, our indicators didn’t do a good job, and most important, we didn’t do a good job of listening to them.
After lots of research by myself and others, we came up with Cabot Tides, which is now one of our key indicators. It simply measures the market’s intermediate-term trend by monitoring five major indexes. It’s simple, but we designed it that way–we wanted it to keep us on the right side of the market’s major movements. That way, we’d never stay heavily invested in a sustained downturn again.
The big test of that theory came in late 2007 and 2008. Happily, the Cabot Tides, along with our other indicators, flashed red starting in November 2007, and we remained mostly defensive for all of the bear market. In particular, we were in a 90% cash position in early September 2008–so we avoided the crash of the next two months. And we received a new buy signal in late March 2009, catching the new bull move. All of us here are proud of that achievement.
Next week Mike will discuss his current market outlook, his top investing rules and one of his favorite stocks right now. To find out whether Cabot Market Leter (or one of our other publications) is right for you, take this simple quiz: http://www.cabot.net/Subcontent/Which-Publication.aspx
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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, I have links below to each issue.
Cabot Wealth Advisory 10/12/09 – What Are Wall Street Analysts Thinking?
On Monday, Brendan Coffey wrote about the Federal Trade Commission’s new regulations for bloggers, Tweeters and other new media types. Brendan also discussed the effect analysts can have on a stock’s actions. Featured stock: American Superconductor (AMSC).
Cabot Wealth Advisory 10/15/09 – Dispelling Investment Myths
On Thursday, Michael Cintolo discussed many common investment myths, like whether a stock is too high to buy and whether the S&P 500 is staging a giant fake-out. Mike discussed the falling dollar, rising gold prices and how to play copper. Featured stocks: Agnico Eagle Mines, Buenaventura (BVN) and Freeport McMoRan (FCX).
Until next time,
Editor of Cabot Wealth Advisory
Editor’s Note: The stock market recently had its best quarter since 1998–with the Dow and the S&P 500 both surging 15%! There’s never been a better time to invest. And to get you started, we’re bringing you a special anniversary offer for Cabot Market Letter, which has been helping investors profit since 1970. Order by the end of October and get the rest of the year free! Click below to get started today.