Are We Having Fun Yet?
Investors in the Movies
Connecting to the Power
I want to speak up for one big benefit of stock investing that doesn’t get a lot of publicity.
I think it’s fun!
Yes, fun. And I don’t just mean that making a big killing on a hot stock is fun.
I think the daily drama and the brain work and the blood, sweat and tears of researching, buying and selling stocks is totally engaging. (It may even be as immersive as playing World of Warcraft or diving into Grand Theft Auto, but I wouldn’t know from first-hand experience.)
I know it’s a fact that the ranks of investors are filled with older people, and I think that’s a good thing. I’m positive that analyzing stocks and the discipline of following market movements and making the agonizing decisions about buying and selling helps many of our subscribers keep their brains nimble. And, of course, older people have had more time to accumulate investable capital, without which you can’t get into the game.
But I can’t help wishing that we could get more young people to see stock investing for the kick-ass, full-on cage-match sport that it is. If young people want to match themselves against a worthy opponent, it would seem to me that taking on The Market, which wants to take your money and is totally merciless, would make for a great contest.
I have no idea how to get around young people’s lack of capital. But the price of entry isn’t prohibitive. With online brokers, you can start a trading account for as little as $500, which is the stock market equivalent of a learner’s permit.
Are young people impatient and headstrong? Sure. But the market is more than willing to beat those qualities out of them. The market, with its big beats and huge wins, is a lot like the drama of Texas Hold ‘Em poker; it tests first and teaches afterward.
I may be wrong, but I think lots of young people would find the market fascinating. It can be anything from a hobby to a lifelong obsession. It’s interactive, happens in real time, has a huge fan base and can even reward its players with wealth if they follow the rules. If that’s not fun, I don’t know what is.
I don’t want to be too obvious about this, of course, but a Cabot growth stock newsletter can go a long way toward raising the odds that fun and profit can go together. After 39 years, The Cabot Market Letter knows the ins and outs as well as the ups and downs of the market. And the Cabot China & Emerging Markets Report and Cabot Top Ten Report have both been around the block more than a few times.
Everyone learns from experience, but smart people learn from the experience of others. And a subscription to one of Cabot’s growth letters can put seasoned advisors in your corner.
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I’m a deeply committed devotee of the movies. I taught film criticism at the University of New Hampshire, wrote film reviews for a seacoast New Hampshire arts weekly for years and had a film review show on the radio for many more. And I’ve been leading film discussions at The Music Hall in Portsmouth for going on 17 years.
But in the years I’ve been watching movies, I can think of only a few in which investors come off as anything other than villains and sleazes.
The biggest sleaze of all, of course, would have to be Gordon Gekko, the ultimate power-shirt, power-tie, power-suspenders villain of Oliver Stone’s movie “Wall Street.” Gekko, with his slicked-back hair and imperious attitude, was (and may still be) a role model for aspiring Wall Street moguls in the same way that Tony Montana, Al Pacino’s drug lord in “Scarface,” has been taken as a model by drug pushers.
There’s actually one movie in which big-time investing looks pretty good, and that’s “Working Girl,” in which a secretary played by Melanie Griffith teams up with an investment banker (Harrison Ford) to pull off a high-stakes deal to fend off a takeover bid.
Generally speaking, the movies favor the little people and those who’ve lost it all schemes over moguls and those who have it all.
But if I’m not mistaken, there has been a recent, high-profile appearance by a tremendously successful investor in a hugely popular movie, although it’s a stealthy one. If you put a picture of Carl Frederickson, the 78-year-old hero of Pixar’s animated feature “Up” next to a picture of Warren Buffett, I think you’ll see what I mean.
The movies may not like rich people in general, and investors in particular, but everyone like Warren. I’m cool with that.
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My stock idea for today is a company that’s working in the cracks in the Chinese power grid. A-Power Energy Generation (APWR) is a small company that builds distributed power generating systems but is moving quickly into the Green energy sector.
A typical A-Power project might be a small (less than $50 million) coal-fired power plant that’s adjacent to a factory or industrial park and provides power to the local area. The plant may or may not be connected to the national power grid, but for its local users, it will certainly eliminate the brownouts and outages that plague China’s national larger grid.
A-Power has a nice backlog of orders in China, and is working to broaden its geographic footprint (soliciting contracts in India) and its product line (making wind turbine components from licensed technologies).
Demand for power in China is virtually boundless, and the government is also working hard to get a handle on pollution, which puts A-Power at a very favorable intersection.
The stock has just broken out of a long, rising base that began forming in June when it was trading at 7. After tightening up in October, the stock broke out on November 17 on news of a big secondary order for wind turbine components. And news of plans to build a plant in the U.S. to serve turbine customers in North and South America only add to the stock’s potential.
The Chinese market seems to be spawning muscular issues like APWR every month, and Cabot China & Emerging Markets Report is a market-leading way to keep up with them. The newsletter also covers the whole spectrum of emerging markets stocks.
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For Cabot Wealth Advisory