American Spending and Saving

The Value of Money–American Spending and Saving

What’s a Webinar?

In Case You Missed It

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Earlier this week, I was browsing around Yahoo! Finance, as I do several times each day, and stumbled across a very interesting set of headlines. They were as follows:

Big, bold headline: Where You Can Find the Best Deals for Cyber Monday

Smaller headline below: Teaching Your Children the Value of Money

Smaller headline below: How Much Do I Need for Emergencies?

Is it just me or are these headlines sending some very mixed messages? I actually laughed when I first saw them because of how ridiculous they seem juxtaposed.

I guess spending less money on holiday gifts by taking advantage of Cyber Monday deals is one way to teach your kids the value of money and a way to save up for emergencies. But that seems too similar to the kind of thinking that got us into our economic mess in the first place. More likely, people spend too much on Cyber Monday (and Black Friday), thus teaching their children nothing about the value of money and leaving little left over to save for emergencies … or anything else.

But one positive change has come out of our long, dark recession and the big bear market: People are saving more.

The most recent article I could find on the subject, from late November, puts the American savings rate at 3%–double what it was last year! Some economists are predicting that it will rise to 8% as families try to recoup some of their financial losses from the last two years.

While consumer spending makes our economy chug along, I applaud the higher rate of savings among Americans. Now, I certainly don’t want our economy to go up in flames or grind to a painful halt, but I can’t help but think that an increase in saving is a good thing. For years, many American consumers have made shopping into a hobby, some going to the mall weekly, or even daily, to purchase (mostly unneeded) stuff. I was beginning to worry that bargain hunting would become an Olympic sport.

So it’s only natural that eventually the tide would turn, that American consumers would put the brakes on, stop overspending and start saving. It makes sense that after years of living on credit and not saving a dime, many American consumers would stop, take stock of things and realize that such a lifestyle can’t be sustained indefinitely.

But things can go too far in the other direction just as easily. Not spending is not healthy for our economy (just look at how excessive saving has kept the Japanese economy in a recession for a decade). It will put even more people out of work and eventually the wheels of commerce will stop turning. While I think that a return to a more conservative way of spending is a good thing, I wouldn’t advocate a total end to the modern age of consumerism.

What we need is to find a balance between overspending and not spending at all. Maybe a whole new wardrobe isn’t necessary every season, but having a few new pieces of clothing probably won’t break the bank. It’s striking that balance that’s going to help the U.S. economy out of the rut we’ve gotten it into, and, more important, keep us on a sustainable growth path going forward.

(On a side note, while I was writing this, someone I follow on our Twitter account wrote a message about how banks are collecting $25 billion to $38 billion in overdraft fees a year. I found that number astounding, but it also further illustrates the point above: That people have been spending way too much money for way too long.)

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Calling All New Investors

Are you new to investing and looking for advice on what stocks to buy? If so, I ask you to consider our entry-level investment advisory, Cabot Stock of the Month Report.
Not only is it priced so low that every investor can afford it, it’s also designed so that subscribers get a taste of a multitude of investing styles. I edit it myself, and every month I highlight a new stock from a variety of investing styles: growth stocks, emerging markets, momentum stocks, Green stocks or value stocks.
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One of our big initiatives at Cabot this year was to start incorporating video (or video-like technology) into our content. With the explosion of video-sharing sites like YouTube, it has become an increasingly popular medium that you, our readers, are interested in.

Most of our video push has been in the form of Webinars, or online seminars, hosted by our editors. At their most basic, these are audio and on-screen presentations of slides and stock charts. The technology is relatively simple and easy to access, making the Webinars available to almost anyone who wants to watch. And they even have an interactive element where listeners get to ask questions and have them answered live.

Pretty cool, right?

Some of you have attended our past Webinars so you know how useful they are for learning investing tools, gaining insights into stock charts, building a strong portfolio and learning what the market is doing right now. One of the features I really love about the Webinars is that every attendee gets a recording of it emailed to them within a few days of the event, allowing them to go back to specific parts as reference.

In October, Mike Cintolo hosted a Webinar for 150 participants. During his 90-minute program, he analyzed over 30 stocks, stressing the reasons that some charts were shaping up to lead the next leg of the bull market, while others were showing signs that they would likely fail. We were heading into earnings season and he advised his audience to sell their laggards and shape up their portfolios with “liquid leaders.”

Here’s what’s happened since: The market corrected, right on schedule.  Earnings results were released, and as always, some were disappointing, while others were thrilling.  And when the bull market resumed, surprising the man-on-the-street who thought continuing poor employment numbers would hold it down, those stocks with the best growth prospects exploded upwards to new highs!

Mike hadn’t planned on doing another Webinar until 2010, but with earnings season behind us and these explosive breakouts catapulting leading stocks higher, he thought this was a perfect time to take you under the hood, for an in-depth analysis of the market, and its biggest opportunities.

During the Webinar, Mike will present his outlook on the market’s health based on Cabot’s market timing indicators, he’ll identify the stocks that he believes are positioned for the greatest growth and he’ll show you how to position your portfolio for optimum profits though the balance of 2009 and into 2010.

Throughout the program, you’ll learn how to apply Cabot rules and tools so that you know what to do to get the most from each stock, no matter what the markets throw at us. Using stock charts and proprietary tools, Mike will identify patterns, trends, support and resistance levels, moving averages, attractive entry and exit points, buying opportunities and much more.

Some of you may be wondering, “Is this Webinar right for me?”

The Webinar will be valuable for investors of all levels:
If you’re a new investor, you’ll learn skills to get up to speed quickly.
If you’re a long time investor, you’ll sharpen skills and learn new techniques.
If you’re a professional investor, you’ll benefit from another expert’s opinion.

To participate, all you need is a computer to see and hear the presentation.

If you’re using a PC, you’ll need Windows(r) 7, 2000, XP Home, XP Pro, 2003 Server or Vista. If you’re using a Macintosh, you’ll need Mac OS(r) X 10.4 (Tiger(r)) or newer.

All this from the editor whose newsletter, Cabot Market Letter, is currently the only investment advisory ranked in the top 5 for market timing over the past six months, one-year and two-year time periods, according to Timer Digest. We’re proud of that, especially the two-year figure, which encompassed the historic bear and bull markets.

Sign up today!

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 11/30/09 – Healthcare, Politics and Education

On Monday, Timothy Lutts wrote about healthcare reform in the United States, the Massachusetts Senate race and the swimming requirement that many U.S. colleges previously had for graduation. Tim discussed a relevant investment idea that might be better than insurance. Featured stock: Medifast (MED).

Cabot Wealth Advisory 12/3/09 – How December Stacks up in the Stock Market

On Thursday, Paul Goodwin wrote about how December stacks up against other months in terms of stock market performance and why you shouldn’t make any investing decisions based on it. Paul also discussed what type of government China really has and what that means. Paul finished by writing about a strong stock from Brazil. Featured stock: Itaú Unibanco (ITUB).

Until next time,

Elyse Andrews
Editor of Cabot Wealth Advisory


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