In the past, I have written my annual reports for readers. Starting this month, I will begin a monthly report. These will be a mix of market developments, Cabot news, and other items of interest to our readers.
With the first of October, it is officially Halloween season here in Salem. Unofficially I’ve been noticing increased crowds, and people of all ages in Halloween costumes since early August, and the crowds get bigger each weekend.
For Cabot and our customers, Halloween is the end of the traditionally weak stock market from August through October. This year has had a few bright spots but overall has followed that trend. We’ve bucked that trend to some extent as recognition of the strength of the economy and the bull market (which actually began last October) has brought a steady updraft. We do not foresee an end to that any time soon.
Market Overview
The Fed has once again signaled they are watching inflation indicators closely but don’t feel they need to take further action. The fact that the economy continues to do well, unemployment remains low, wages are growing modestly, and inflation remains moderate are all good signs. The autoworkers strike, and most importantly, the looming possibility of a government shutdown are signs of possible trouble on the horizon.
Oil prices are up a bit and we’re starting to see that at the pump. But we are not anywhere near historic highs and prices are still down year over year so it’s important to keep thinking with our head and not with our emotions.
This is not the first time and it certainly won’t be the last that I strongly advise you to not base your investing decisions on today’s headlines. News comes and goes. Some of it has an actual impact on the stock market and investing opportunities but not much. And there’s a whole community of pundits and commentators to tell us how terrible things are and how they’re about to get even worse.
But here’s the thing – things aren’t bad. Our economy is strong. Employment is strong. The stock market is having a good year. So do yourself a favor and tune out the news when you’re thinking about your investments.
The biggest story around here is …
Cannabis
After more than two years of moving sideways across the floor, cannabis has exploded. Prompted by news that the Department of Health & Human Services and the Food & Drug Administration now recommend reclassifying cannabis from a Schedule I substance to a Schedule III substance (which can be legally sold in drug stores) opens the door to further legalization.
The reclassification makes it politically less risky to support the SAFE Banking Act which would open up a range of financial services currently unavailable to the cannabis industry. Banking and accepting credit and debit cards would now become much easier, fueling further growth.
Within a week, the sector had taken off. The portfolio created by Michael Brush, Chief Analyst for Cabot Cannabis Investor has done even better, at times outperforming the S&P and running well ahead of the New Ventures Cannabis Index. These are structural changes in the cannabis industry that will drive the continued march toward legalization, and therefore industry growth.
Buying Options on Takeover Targets
On September 12, our long-standing options expert Jacob Mintz recommended buying a SPLK 125/150 bull call spread. Seven trading days later, on September 21, SPLK was taken over by CSCO for $157 a share. Upon completion of the takeover, subscribers to Jacob’s Private Circle will close at a profit of 170%.
This is the second time this year Jacob has recommended a takeover target. In July he bought a bull call spread on ISEE which was then taken over producing a 195% profit for subscribers.
Jacob has also been on a roll with Cabot Profit Booster, boosting yields on momentum stock trading by 3.85 to 11.15% on his August trades.
Just Released – FREE Report – The 5 Best Stocks to Buy in October
Cabot’s Chief Investment Strategist Mike Cintolo has selected his top 5 momentum stocks to buy now. Get his picks with a briefing on each and why he feels these are good bets. You can get immediate access to this free report here.
For your investing success,
Ed Coburn
President & Publisher
Cabot Wealth Network
