Cabot Dividend Investor Weekly Update
Earnings have been sensational. Reported earnings for S&P 500 companies have grown an average of 2% in the fourth quarter, compared to an expected -11%.
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The Dow Jones Industrial Average began life in 1896 as a simplified way for the average American to understand the health of the U.S. economy. The Dow is calculated using the 30 largest companies that trade on the New York Stock Exchange.
These companies:
Though it may be one of the most frequently referenced indexes, the Dow is also a questionable proxy for the health of the total U.S. stock market. Its total concentration on Blue Chips (very large, stable, mostly dividend-paying companies) makes it too conservative to be a true representation of the broad market.
Additionally, the make up of the index can change. For example, on June 19, 2018, investors learned of the historic news that General Electric (GE) stock has lost its position among the 30 corporate heavyweights that make up the Dow Jones Industrial Average stock market index. GE stock was a proud member of the Dow for 111 uninterrupted years.
A variety of factors contributed to this stunning change of events, including the Dow’s lower emphasis on manufacturing companies, GE’s struggling finances, and its very low share price. The Dow is a price-weighted index, meaning that a low-priced stock like GE cannot contribute meaningfully to the index’s value.
By replacing GE with a much higher-priced stock, the value of the index can rise more than it would by continuing to hold any low-priced stock, whether that stock belongs to GE or a rapidly growing company. With regard to the index’s price-weighting, a writer for the Financial Times stated, “I have long contended that [the DJIA] is a pointless and mathematically unsound index that measures nothing in particular.”
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Earnings have been sensational. Reported earnings for S&P 500 companies have grown an average of 2% in the fourth quarter, compared to an expected -11%.
Read More
“Legal Weed Stocks Dip Despite New Jersey Governor Signing Recreational Cannabis Bill Into Law”
That was the headline on one of my news sources yesterday morning, implying that the action of the stocks in light of that legalization event was somehow illogical. But as know...
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The stock market is clearly accelerating the “reopening” trade. Small cap and cyclical stocks as well as commodity prices are surging, interest rates continue to tick up (the 10-year Treasury yield is now 1.38%, up from 0.92% at year-end), and novel financial vehicles SPACs,...
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We are modestly optimistic on energy prices – domestic production will likely remain subdued while global demand has essentially returned to pre-pandemic levels even though some petroleum-driven demand for gasoline and jet fuel hasn’t fully recovered yet.
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The overall market isn’t cracking yet, but growth stocks are beginning to flash lots of abnormal action. With our trend-following indicators still positive, we wouldn’t sell wholesale, especially if you came into this week with some cash (we had 20% in the Model Portfolio).
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With the shares continuing to surge past our recently raised 65 price target, and now being priced at a premium to even our upgraded valuation metrics
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With this week’s recommendation, I’m swinging back to the more conservative side with a solid technology company poised for big gains from the 5G communications rollout.
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Stock Recommendation Tracker
The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
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Stock Recommendation Tracker
The Stock Recommendation Tracker is a table that features all of the current recommendations in all of our portfolios. It’s a quick way for you to see what stocks are currently in our portfolios and will highlight new additions or any to...
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Today’s note includes earnings updates, ratings changes and the podcast.
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After some solid up weeks, the major indexes are down a bit so far this week, with the bigger blows seen among the broad market, as small- and mid-cap stocks are down 2% or so coming into today, while the bigger-cap indexes are a..
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The market took another hit this morning, but like yesterday, the major indexes have found support as the day has progressed—just after 3 pm EST, the Dow was down 70 points while the Nasdaq was off 66 points. Part of the reason for recent...
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Some investors are bracing for the possibility that all this will lead to a surge in the cruelest tax of all – inflation.
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As mentioned last week, today’s Weekly Update will be an abbreviated version owing to the short work week and because of family commitments as our kids are out of school and I am solo parenting, making free writing time hard to come by. said,...
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Earnings have been sensational. Reported earnings for S&P 500 companies have grown an average of 2% in the fourth quarter, compared to an expected -11%.
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With the stock market regularly surging to record highs, it may seem like an unusual time to focus on valuation. After all, many stocks are remarkably expensive on traditional measures, and even somewhat lofty on non-traditional measures. But valuation still matters, especially if market...
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While the rest of the year looks very good for the market, a pullback is likely, if not inevitable, in the weeks and months ahead.
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Stock Name
Market Cap
Price
Investment Type
APi Group (APG)
$3.6 billion
19.25
Growth & Value – Industrial Services
C3.ai (AI)
$14.1 billion
147.17
Rapid Growth – Software
Fisker (FSR)
$5.4billion
19.46
Development Stage – EV Designer
JFrog (FROG)
$6.3 billion
69.23
Rapid Growth – Software
Poshmark (POSH)
$5.4 billion
73.29
Rapid Growth – Resale/Social Platform
Make Hay While the Sun Is Shining
This has been a phenomenal for...
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This week’s recommendation is a small company with no earnings, minimal revenues and a lot of competition.
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Today’s note includes earnings updates, ratings changes and the podcast.
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