Cabot Stock of the Week 344
The bull market rolls on—but it’s not a perfect bull market. In fact, it’s showing signs of age, with divergences and rotations that alternately reward and retard various sectors from time to time.
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At its most basic, inflation means it costs more money to buy goods and services. It means that dollar bill in your pocket isn’t worth as much right now as it was ten years ago.
For investors, inflation is widely believed to be detrimental to bonds, but there are conflicting opinions on how it influences stocks. In a nutshell, the positive impact of inflation on the top line is nullified by various associated costs, resulting in a neutral bottom line. So the equity side of the balance sheet faces almost no impact from inflation, resulting in a neutral return on equity but a higher debt-to-equity ratio.
It’s worth pointing out, however, that inflation is intimately tied to interest rates. Inflation is the number-one driver of higher interest rates, and that’s controlled to some extent by the Federal Reserve.
Throughout its history, the Fed’s priorities have evolved to reflect changes in the economy. Prior to World War II, its role generally remained limited to maintaining financial market stability and preserving the value of the dollar. With the arrival of the war, the Fed’s policy shifted to help keep interest rates low to facilitate the government’s war borrowings. In the decades after the war, the Fed’s primary objective was to keep inflation tamped down – occasionally raising interest rates to “remove the punch bowl just as the party was getting started.”
In short, forecasting the dollar’s trend is a notoriously difficult task due to the myriad of variables involved. For investors, the overall economy is worth keeping an eye on, however, the answer to the “what to do with your money” question is obviously to invest it.
Investing puts your money to work for you and offers the possibility of outpacing inflation and even multiplying it over time.
To learn more about stocks and investing, download our FREE report, How to Invest in Stocks and Other Investing Basics, today. You’ll learn about the four types of stocks, what it takes to be a successful investor, and you’ll discover five reasons you should skip the broker and invest on your own.
The bull market rolls on—but it’s not a perfect bull market. In fact, it’s showing signs of age, with divergences and rotations that alternately reward and retard various sectors from time to time.
Read More
Porch Group (PRCH) has been very weak recently and moves to hold today. This move hasn’t been unique to PRCH, in fact most SPAC IPOs have been soft for a while now. However, we saw a sizeable decline on Friday and follow-through softness today.
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The market has hit an air pocket over the last few sessions and SPAC IPOs have been particularly soft for a few weeks now. Today we’re taking partial gains in a few positions and cutting losses short in another.
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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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We’ve seen a big improvement in the way many growth and early-stage stocks are acting over the last two weeks. Many of our stocks that sold off in March have been gaining some altitude back, and many of those that were acting well to...
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Markets seem to be pausing a bit, with some stocks losing momentum while a few show surprising strength.
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It’s been another mostly constructive week as many of our stocks inch higher and the economic picture continues to improve.
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Continue to go slow but have your shopping list ready. Growth stocks are gradually improving their standing, with more popping toward their highs, many holding their gains and a few finding some good-volume buying.
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This is an unusual environment to say the least. The market is looking ahead to the highest GDP growth in decades as vaccines end the lockdowns and restrictions. And forecasts continue to rise. At the same time, trillions in government stimulus will flood the...
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EBITDA, or earnings before interest, taxes, depreciation and amortization, is a straight-forward measure (not a perfect measure, though) of a company’s cash operating profits. But, like seemingly all metrics published by company managements, it is usually adjusted for unusual items that may be non-recurring.
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The leading indexes continue to hit record highs, telling us the bull market that began over a year ago, though it is showing some signs of age, remains intact.
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Interest rates may be rising fast, but they're still historically low. The best high-yield stocks are far better investments. Here are two.
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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...
Read More
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...
Read More
Sellers Fading—but Will the Buyers Show Up?
We’re all about going with the evidence, and when it comes to growth stocks, the evidence was nearly uniformly negative (or at least not positive) for most of the past month. The vast majority of leading stocks, many...
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There’s no doubt things are looking a little better out there as many software, MedTech and other growth stocks retested their March lows late last week then turned north. The timing of that short-term reversal, coinciding with the end of the first quarter, definitely...
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Nearly 95% of companies in the S&P 500 are now trading above their 200-day moving average, according to Dow Jones Market Data, the highest percentage since May 2013. As if we didn’t have enough to worry about, as of late February, investors had a..
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How about this market? Even with the technology sector still in a funk and the huge energy sector rally abating, the S&P 500 just made a new all-time high anyway.
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Determining a company’s underlying value is difficult, and clearly more of an art than a science.
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