Get-Rich Stocks vs. Stay-Rich Stocks
One Great Year-End Deal on Get-Rich Stocks
One Great Stay-Rich Stock
If you were George Lucas, who recently sold his business to
Disney for $4 billion, how would you invest that money? If you
listened to the average financial adviser, you'd diversify. You'd
put some in real estate, both urban and rural. You'd put some in
tax-free bonds. And you'd put some in high-quality
dividend-paying stocks, both domestic and international. You
might even buy a bunch of gold, silver, cars, wine, guns, fine
art-even the rights to old movies.
Having done that-and hired managers to keep an eye on
things-you could relax, and pursue whatever struck your fancy,
knowing that the value of your portfolio in the long run would at
least keep up with inflation.
That's what I call "Stay-Rich Investing."
But what if you're not George Lucas? And what if, like most
Americans, you haven't yet amassed a portfolio large enough to
practice Stay-Rich Investing?
Then you need to practice "Get-Rich Investing," and that's a
very different activity.
Because you want substantial growth, you've got to take
greater risks; tax-free bonds won't do it for you. But because
you can't afford to lose much, you've got to control that risk
Now to some people, that's going to sound like a
contradiction. How can you take more risk if you're going to
control for risk more tightly?
Well, the answer to that lies in the timing; you take more
risk when the market environment is rewarding risk-takers and you
take less risk when the market environment is penalizing
risk-takers. In that way, you come out ahead in the long run.
In fact, that's precisely the investing system that's been
Cabot Market Letter
for the past 42 years. It's stood the test of time! And in that
time, it's doubled the investments of subscribers many times
In fact, over the past five years, while the broad market has
made no net progress, Cabot Market Letter has continued to guide
readers down the path to profits, outperforming S&P 500 funds
by 8% per year, resulting in about 50% more money than the index.
And that's saying nothing about the investors who followed their
gut and bought high and sold low and did even worse!
A key aspect of this investing system is timing; I can't
emphasize enough how important it is to hold cash when the market
is going down. Holding cash preserves your capital so you can
invest more when markets are going up.
But equally important is stock selection, for those times when
the market is rewarding risk-takers.
The mistake most people make when they select a stock is this:
they buy proven winners, like Apple, Microsoft and Netflix.
Trouble is, those stocks' best days are behind them; in fact,
some may have peaked for good. There's a ton of potential selling
power in those well-known stocks because they're already heavily
owned by institutional investors.
What you should do instead is buy the next Apple, the next
Microsoft and the next Netflix. Now, obviously, this takes more
work. It takes research. It takes imagination. And it takes
courage. But when you make the right choice, the payoff can be
Happily, we can help. In fact, I've just created a special
report titled "5 Rising Stock Stars for 2013" and I'd like you to
have it. It details five up-and-coming companies with the
potential to make you big money in 2013.
One is in the huge athletic apparel industry. I think it has
the potential to be the next Nike.
One is in the fashion apparel industry. I call it the next
One is in semiconductors. I call it the next Intel. The
difference is that in Intel's heyday, the growth was in CPU
technology. Today the action is in chips that enable networks,
like the Cloud.
One is in the fast-growing field of medical data collection
and analysis; as Obamacare is implemented nationally, this
company's business is almost guaranteed to thrive.
And one is a social media company for professionals. I call it
the opposite of Facebook, because while Facebook came public to
great fanfare and flopped, this company came public quietly and
has been rewarding shareholders since.
The future for these five companies is bright, and their
charts confirm this. All five have stocks that are being
accumulated by savvy institutional investors. And because they're
not very popular (yet), all five stocks promise big rewards to
investors who get on board at the right time.
Here's how you can get this report.
Simply take a no-risk trial subscription to
Cabot Market Letter
here. It may be the best investment you make all year-and
the year hasn't even started!
Moving on, I do have one Stay-Rich Stock idea as well,
courtesy of my daughter Chloe, who's the editor of
Dick Davis Dividend Digest.
It has low business risk, a good dividend and an attractive
But first, let me explain why I think high-quality
dividend-paying stocks like this are a particularly good bargain
It's not because I'm fearful of the national or global
economy. As an optimist, I know today's problems will be
resolved, and that-as always-there will be great investment
successes in the meantime.
And it's not because I'm leery of growth stocks; I can always
find a growth stock I like.
No, today, I'm spotlighting a dividend-paying stock because
nearly every day, Mike Cintolo stands up to talk across the
partition between our desks to mention another high-quality blue
chip that is selling at a bargain price, has a good dividend and
has a chart that has gone nowhere for years (meaning it's ripe
In other words, scores of high-quality dividend-paying stocks
look very attractive today, both fundamentally and
One of them is the well-known International
Business Machines (
, which was recommended by Patrick McKeough, Editor of
Canadian Wealth Advisor
. Here's what Pat wrote, which was reprinted in
Dick Davis Dividend Digest.
"International Business Machines Corp. (IBM, $190) is down
from $210 a share in mid-October after it reported revenue of
$24.7 billion in the quarter ended September 30, 2012. That's
down 5.4% from $26.2 billion a year earlier and short of the
consensus estimate of $25.4 billion. The slow global economy is
hurting demand for IBM's mainframe computers, services and
software. That's why its revenue fell. However, the company's
ongoing cost cuts and productivity improvements pushed up its
earnings before one-time items by 10.4%, to $3.62 a share from
$3.28. That beat the consensus estimate of $3.61.
"Like most big tech stocks, IBM needs an improved global
economy to post significantly higher revenues. But it is keeping
its research spending high, at $1.6 billion, or 6% of its revenue
in the latest quarter. These investments are letting IBM continue
its expansion in high-growth areas, such as Cloud computing and
analytics software, which helps businesses track consumer
purchasing and other data. That positions it for gains even if
the economy recovers slowly. The company still expects to earn at
least $15.10 a share in 2012. The stock trades at just 12.9 times
that estimate. The company also aims to increase its earnings to
$20.00 a share by 2015. IBM is still a buy."
Now, if this appeals to you, you could just run out and buy
IBM today. It would probably work out okay. Trouble is, you
wouldn't know when to sell. And you should probably have other
dividend-payers in your portfolio, for balance and
That's why I recommend that you take a no-risk trial
Dick Davis Dividend Digest
. With that you'll not only get a 12-page report every month
featuring dozens of thoroughly-researched recommendations from
the best advisers in the business-and follow-ups-you'll also get
a daily alert, featuring a brand new recommendation. I get these
daily alerts by email at 6:00 am every day, and I love
Yours in pursuit of wisdom and wealth,
Cabot Stock of the Month