Stock Market Video Pumpkin Season, and Thoughts on Active
They May Be Right But That's My Opinion
Stock Market Video
Pumpkin Season, and Thoughts on Active Management
They May Be Right But That's My Opinion
In Case You Missed It
In this week's Stock Market Video, Mike Cintolo discusses how
this week's sharp pullback could have some short-term
reverberations, but so far, the intermediate-term trend of the
indexes and all liquid leading stocks remains up. Stocks
Regeneron Pharmaceuticals (
), Lululemon (
), Salesforce.com (
Click below to watch the video!
Pumpkin Season, and Thoughts on Active
September is fast disappearing, bringing us face to face with
October means lots of different things to different people, of
course. Here in New England, it signals the start of leaf-peeping
season, a period when the flatlanders who were at the beaches in
August return to inch their way through our scenic highways and
In addition to red and yellow leaves, pumpkins are a scenic
feature, and money is expected to flow into the local economy in
exchange for the obstruction of traffic.
For most retailers, October is the beginning of the edible and
drinkable pumpkin season, signaling the arrival of an avalanche
of baked goods, beers and candies. Myself, I like beer that
tastes like beer and coffee that tastes like coffee, but I have a
high tolerance for pumpkin breads, muffins and pies.
For investors, the Almanac tells us that October is the start
of the period of the year that has historically had the best
performance in the stock market. In other words, it's when the
"sell in May and go away" crowd decides it's safe to go back in
I've never really understood why any reasonable investor would
pay more attention to a historical average than to what's
actually happening with market conditions, but the quest for a
"set it and forget it" investing system that never requires
active management has been going on for a long time.
The idea is a powerful one, I'll admit. In one simple form,
investors just set an automatic allocation to an index fund-the
S&P 500 Index is a popular choice-then just keep ladling
money in, month after month and year after year, through bull and
bear. Then they retire and start taking money out.
I have one friend who has been doing this on an even simpler
basis, putting a set amount of money into a program that
accumulates it, then buying a share of Walt Disney (DIS) when his
balance gets to the stock's current price. And generally, he's
been pretty lucky in his choice of stocks.
But aside from stating the obvious, which is that just about
any investment program is better than no program at all, I have a
real problem with the passive, constant ladling strategy. And
that is that it leaves the investor at the mercy of the
Yes, the long-term direction of the market is up, and if you
have enough time, you'll come out ahead.
But if two major market bubbles bursting aren't enough to
convince you that being more active is a good idea, I don't know
For people my age, the calamity of the Tech Bubble and the
Housing Bubble drawdowns means that lots and lots of people are
working longer than they wanted to and will retire with much less
money than they expected to.
Much of this personal disaster could have been avoided if
people had been willing to take some responsibility for managing
their own retirement accounts, especially with regard to exiting
their equity funds and going to cash when markets turn sour.
I'll write more next week about how you can stop acting like a
boat with no motor when a storm is coming. Between now and then,
maybe you can be thinking about what your retirement account
balance might look like if you had known when to hop off the
market rather than riding it all the way to the bottom.
Here's this week's Contrary Opinion Button. Remember, you can
always view all of the buttons by
They may be right But that's my opinion
This may be the most difficult button to interpret. One
explanation is that by starting with the common phrase "They may
be right" but then undermining that already-weak statement with
the qualifying, "But that's my opinion," the button simply says,
"Who knows?" If you've got a better explanation, I'd love to hear
[Editor's note: Leaving out the problem of the non-existent
punctuation, this looks to me like either a version of "My mind
is made up; don't confuse me with facts," or a simple assertion
that "If I have to take responsibility for it, I'm going to pay
attention to what I think, not what everyone else thinks." But
I'm with Tim; I'd enjoy hearing your interpretations.
In case you didn't get a chance to read all the issues of
Cabot Wealth Advisory this week and want to catch up on any
investing and stock tips you might have missed, there are links
below to each issue.
Cabot Wealth Advisory 9/24/12 - The ONE Stock
to Buy Right Now?
In this issue I tried to explain why neither I, nor any other
Cabot editor, can tell you what's the absolute best stock to own;
better to own a small herd and keep your sell disciplines sharp.
Royal Gold (RGLD
Silver Wheaton (SLW).
Cabot Wealth Advisory 9/25/12 - Taming the
In this issue, Rick Lehman of
Cabot Option Trader
discusses how options can be used to take the sting out of the
volatility that afflicts all individual stocks.
Cabot Wealth Advisory 9/27/12 - Now's the Time
to Buy Undervalued Canadian Stocks
Roy Ward, the value expert behind
Cabot Benjamin Graham Value Letter
, looks at the attractive valuations of Canadian companies.
Valeant Pharmaceuticals (VRX).
Cabot Wealth Advisory
Cabot China & Emerging Markets Report