A Short History of Cabot
A Great Growth Stock
Uncertainty Is Not Chaos
In Case you Missed It
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First today I want to share a note that we received this week from M. Liner of Wheelock, Texas:
“I was reading Rick’s comments and at the end I noticed Elyse’s slide show [Yahoo users see photos from our Flickr account in our emails]. I really appreciate seeing the pictures and seeing where you guys work. I especially love the fact that you guys are true to your roots. I love the pictures of the old Cabot barn (I think that’s a barn). I love how you guys all look comfortable and happy where you work. Ya’ll really have it made doing what you do in that setting. Your newsletter was the first one I ever have tried, and I am a subscriber now to three of your publications. Almost everything I started out believing about the market has been validated by you guys, plus you’ve added a lot of things I couldn’t have known otherwise. I’ve made a lot of money in the market thanks to you and Michael. I’ve been in the market for almost exactly two years now and I have written my own system to fit my style and it’s served me very well. I plug in the stocks that you and he recommend to the system I have written, and a sprinkling of my own stocks also, and things are going well for me. I feel like I have literally learned a lifetime’s worth of info from you guys and from Jesse Livermore in his writings. I feel completely comfortable trading stocks on my own with all of the things I have mentioned above. I was scared of the market before I got into doing this, and I see now there is nothing to be scared of. Thank you all for being so down to earth and reachable. It’s not like I’m sending in my money to a huge corporation where I get put on hold and my emails aren’t answered. You guys are real and you’re good at what you do.”
Getting an email like this is extremely gratifying for everyone here at Cabot--it’s great to hear that we’re helping people take control of their investments and become independent investors. We also love hearing that people appreciate our personal approach to business that allows you to call us on the phone or send us an email. And while we’re always growing and planning for the future, we strive to stay true to our humble roots!
However, instead of resting on our laurels, I’d like to share with you the story of Cabot so you can better understand how we got to where we are today.
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 patents on methods 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 (shown below) 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, energy 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 also works for Cabot, as the editor of the Dick Davis Investment Digest and Dick Davis Dividend Digest, which we publish. You’ve probably noticed her writing in Cabot Wealth Advisory from time to time or in her free newsletter, Investment of the Week.)
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As Cabot Top Ten Trader Editor Mike Cintolo wrote on Thursday in Cabot Wealth Advisory, it’s not easy to pick just one stock to write about now because many are starting to look good. So today I’m going with a classic that we’ve written about before but still looks like a great growth stock (and it’s one of my favorite lunch places!): Chipotle Mexican Grill (CMG). Here’s what Mike wrote about it recently in Cabot Top Ten Trader:
“Retail stocks can have long shelf lives in the market, because if a firm has a successful concept, it can take years before the company has maxed out its potential. Chipotle Mexican Grill is a perfect example; shares attracted a lot of interest when it came public back in 2006, and after going through the wringer during the bear market, it’s been a leader of this bull market. The firm’s commitment to a simple menu (basically five items) with fresh, naturally raised ingredients that are grown locally (it just said it’s planning to double its use of locally grown produce this year) has been a hit; Chipotle now operates more than 1,100 restaurants and we see plenty of room for growth. Indeed, the company just began to expand in Europe and is testing a new Asian-themed restaurant concept this summer. It’s not changing the world, but Chipotle is still a classic growth company.
“CMG has had a big run during the bull market, but, impressively, was one of the first stocks to leap to new high ground in recent days. The stock emerged from an ascending-type base (gradually higher highs and higher lows over many weeks as the market corrects), which usually occurs late in a stock’s overall move ... but can also lead to sharp rallies in a brief time. We think CMG is buyable on minor weakness.”
You could buy CMG here and hope for the best or you could get Mike’s latest recommendation on this and other top stocks in Cabot Top Ten Trader. A new issue comes out Monday after the market’s close. Don’t miss it!
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Now for today’s Contrary Opinion Button. Remember, you can always view all of the buttons by clicking here.
Uncertainty Is Not Chaos
In the field of Contrary Opinion, uncertainty and doubt are good things, because they allow truth to creep in. Certainty sometimes shuts out truth, and thus wisdom. Chaos means utter lack of order and unpredictability, and if that’s your state of mind--or the state of the market--you’ll be better off in cash until there is some order in both.
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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 7/5/11 - My Outlook for the Second Half of 2011
On Monday, Cabot Options Trader Editor Rick Pendergraft reviewed the market’s action in the first half of the year and discussed why he thinks the market will trend upward in the second half of 2011 (as long as the U.S. debt ceiling is raised). Rick compared the market’s 2011 chart with that from 2010 and noted many similarities. He also discussed the Investors Intelligence report, which has been extremely bearish recently, indicating that the market is likely to turn up.
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Cabot Wealth Advisory 7/7/11 - Focus on the What, Not the Why
On Tuesday, Cabot Market Letter Editor Mike Cintolo discussed the importance of focusing on the market’s action, not the news of the day. He also discussed why you need to have conviction in your stock and why you shouldn’t invest from a place of fear. Mike finished by recommending a stock with a good story, good numbers and a good chart. Featured stocks: Fortinet (FTNT).
Until next time,
Elyse Andrews
Editor of Cabot Wealth Advisory
P.S. Due to a technical error, we don’t have a video for you today. Please accept my apologies and assurances that next week, we will have a video for you. In the meantime, you can check out our timeless Cabot Chart School videos hosted by Mike Cintolo. Click here to view them.