Cabot Stock of the Week 332
Overall, the market remains very healthy. Yes, sentiment is a bit high, and yes, valuations are a bit high, but I learned long ago not to fight the trend.
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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.
Overall, the market remains very healthy. Yes, sentiment is a bit high, and yes, valuations are a bit high, but I learned long ago not to fight the trend.
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...
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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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The big news this week was, of course, the swearing in of President Biden and all the associated stories about the transition. Fun fact – portfolio holding Everbridge (EVBG) supplied its Mass Notification system to help keep Washington, D.C. area residents and visitors safe and in...
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Today, I have a new recommendation that links three high profile growth trends: SPACs, e-commerce and internet gaming, and mobile payments.
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The market is off to a good start this year and anticipating wonderful things for 2021.
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As value investors in a remarkably robust (exuberant) stock market, full valuation impels us to want to sell a stock. Such is the case with General Motors. On most conventional metrics, the stock is fairly priced. Through the courtesy of several friends, we’ve some...
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Overall, the market remains very healthy. Yes, sentiment is a bit high, and yes, valuations are a bit high, but I learned long ago not to fight the trend.
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
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
Taking Things on a Stock-by-Stock Basis
We believe one of the main reasons our system has proved durable is that it doesn’t focus on just one or two factors, but incorporates things from different angles. For instance, when selecting stocks, we’re not only looking charts...
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As we near the end of the second week of 2021 and approach inauguration day, the market is barreling full steam ahead, seemingly unaware of the dung piles that are consistently thrown in its path.
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The phrase you hear more than ever from market prognosticators these days is that they are “cautiously optimistic” about the state of the stock market. In some ways this is pretty useless advice, but in another it hits the nail on the head. market...
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Most stocks on the Cabot Undervalued Stocks Advisor recommended list had strong performance this past week. Part of the strength was perhaps due to money managers’ general optimism that seems to brighten with turn of the calendar. With last year’s bonuses firmly in bag,...
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A Goliath of the Dawning Digital Age
Are you sick of hearing about the virus and the election? I know I am. But there’s good news. As hard as it may be to believe, these current obsessions will fade away, and soon. As the from...
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How I Pick Micro-Caps
It’s been a while since I’ve explained my process for picking micro-cap stocks so I figured it would be worthwhile to review.
It can be extremely profitable to invest in growth companies, as any Tesla or Amazon shareholder will tell you.
But is...
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The first week of the year saw buyers dominate, pushing the major indexes to higher heights on most days. Thus the major uptrend is intact, but extended, which means this is probably not the best time to buy an aggressive growth stock.
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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
The most important catalyst for America’s political upheaval as well as the prime generator of wealth over the last three decades has been the inexorable rise of finance and technology and the relative decline in terms of jobs, growth and profits from manufacturing industry...
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