Raising Kids and Other Reasons to Be in the Market
November marks the end of Halloween season here in Salem. I say “season” because Halloween revelers start visiting Salem in early September, with their numbers growing each week through October 31.
This October also saw me become a grandfather as my first daughter had her first son. This delightful and happy occasion is also a motivation for parents (and grandparents) to revisit their financial planning. Raising a child born in 2023 in a middle-income family is projected to cost upwards of $300,000 on average. That gets them to 18 so the cost of college is not included.
And of course, financial advisors recommend parents don’t put off planning for retirement until after raising their children. Those that do lose the compounding benefit of investing over decades. No one said being a parent is easy.
On average the stock market goes up. And for more than 100 years, stocks have proven to be one of the most profitable places to put your assets. So, we are always believers in the market as part of any long-term financial plan.
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Right now, there are lots of reasons to be optimistic. Look at what has been thrown at the economy over the past three years. Pandemic, massive governmental cash infusions, inflation, high unemployment, historically low unemployment, the Fed raising rates repeatedly, disrupted supply chains, political unrest in the U.S., war in Ukraine, and now fighting in Gaza. (So far we’ve been spared locusts, but the year isn’t over yet.)
Throughout it all, the U.S. economy has been resilient, getting thrown around but, like a cat, always landing on its feet. Last week’s Commerce report of 4.9% annualized GDP growth is surprisingly strong. And the core PCE index (inflation) for Q3 was at 2.4%, down from 3.7% in Q2, getting close to the Fed’s eventual target of 2.0%. Coupled with continued strong employment numbers and wage growth, it looks like we have successfully navigated clear of a recession for now.
As for the stock market, the 2022 volatility caused a lot of money to be moved to the sidelines, and with interest rates up, those sidelines are more attractive than they’ve been in years. All of the background noise has dampened consumer sentiment. But, as noted above, in the long run, the market is the place to have your money and as that money comes back into the market, we’ll see prices rise as well. That’s why professional sentiment is overwhelmingly positive by several indicators that we follow.
All in all, this is a good time to be in the market and to be (carefully) buying. Savvy investors are doing just that. We have just released a new report, The 5 Best Stocks to Buy in November by our Chief Investment Officer Mike Cintolo. These five stocks are showing strong momentum and would make a great place to start investing in this market. Best of all, you can get this report absolutely free.
Cabot Street Check Talks China Investing with Larry Cheung
In the latest episode of Cabot Street Check, co-hosts Chris Preston and Brad Simmerman had the opportunity to talk about investing opportunities in China with investing expert Larry Cheung, CFA. Larry shares his insights and observations from his recent travels in China and Hong Kong. In a word, Larry is bullish on China right now and also shares his views on Chinese investments to avoid. You can find Larry Cheung on his popular YouTube channel and subscribe to Letters from Larry on Substack.
All-Weather Options Trading Drives Yield and Profits
After more than a decade of strong bullish growth, capped by the 2020 and 2021 bonanza, the market has bounced around more in 2022 and 2023. That same volatility presents opportunities for options traders.
I know a lot of people are intimidated by the thought of options. The language of options trading is not as familiar as that of trading stocks. And it’s not uncommon to hear stories from people who got over-leveraged and got themselves into trouble with losses. This has been particularly true of some younger investors who have plunged into options with minimal knowledge and maximum hubris.
But, options provide an extensive range of ways to invest that can work in any market and can greatly reduce the amount of capital you have to put at risk. This is why options trading has seen such tremendous growth over the last decade which shows no signs of slowing.
For those looking to get into options, I recommend getting educated on its nuances. And, having an expert guide to follow while you’re getting started is a good way to make fewer costly mistakes and to see benefits sooner.
As you may know, we launched the Cabot Options Institute (COI) advisory services in 2022. NOT a great time for the market in general. Even so, the COI services have achieved some very nice returns since June 2, 2022.
COI Quant Trader – up 182.8% overall winning 36 of 41 trades
COI Income Trader – up 107.42% overall winning 54 of 67 trades
COI Earnings Trader – up 93.2% winning 30 of 37 trades
Chief Analyst Andy Crowder’s strategy relies on high-probability trades, primarily selling puts and “poor man’s” covered calls which can greatly increase yield. This proven methodology tends to produce lots of wins. While each win may be relatively modest, the short holding periods (typically 1 day to several weeks) required mean the funds can be repeatedly reinvested, producing profits that accumulate and compound into the returns above.
Notable October Successes
I like to call out exceptional trade results from the preceding month here, and this month I have to mention two trades by Jacob Mintz:
Cabot Options Trader closed a trade on XLE January 85 calls for a profit of 72.25% …
and …
Cabot Options Trader Pro, which uses a range of more sophisticated trades, closed an XLE January 85/105 Bull Call Spread for a profit of 89.32%.
Please note: The trade performance I highlight here is not representative of typical trade results. And, all investing involves risk, including risk of loss.
That’s it for now. I wish you all a very happy Thanksgiving and profitable investing.
Sincerely,
Ed
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