Last weekend my wife and I attended a launch party for a new
food-and-wine magazine called Northeast Taste. The editor
and publisher are both old friends, and the new publication is
the culmination of many long years of editing and publishing
other people's books and magazines.
But the reason I'm writing about them today-besides my gratitude
for the pear vodka, amaretto and ginger beer martini I was served
at the party-is that my friends are a great example of what I
call reluctant entrepreneurs.
I know there's a 2009 book called
The Reluctant Entrepreneur
by Lynn Parker, but my friends were using the title for
themselves back in the 1980s. Ms. Parker's book is aimed at
people who became entrepreneurs because that was the only way
they could achieve the working conditions they wanted.
My friends, on the other hand, became entrepreneurs because they
lost their jobs.
It's a very different kind of reluctance.
It's also hard to gauge the likelihood that the new magazine will
make a go of it. I'm told that sales of food-and-wine books
and magazines have held up very well during the economic downturn
and the employment doldrums that followed. Pre-orders from
distributors have been higher than expected, which is a great
But what really interests me is the phenomenon of good results
coming out of bad situations.
Here's one example from the years after the Tech Bubble burst in
While the Tech Bubble was still inflating at high speed, there
was a maxim making the rounds to the effect that "band-width is
the ultimate commodity." And in response to the logic of
that maxim, the country went on a fiber-optic building spree that
laid down enormous digital highways capable of handling tidal
waves of data.
Those highways went begging for traffic in the few years after
the dot.gone era arrived, and it looked like all that building
was in vain.
But it's one of the laws of the universe that abundant resources
tend to generate their own uses, and the exponential rise of
email, instant messaging, online commerce, cloud computing and
the flood of file sharing of music, pictures and videos was made
possible by all that unused transmission power. Even now
that everything is going wireless for its final leap to devices,
it's the fiberoptic highway system that does the heavy lifting of
moving signals from router to router.
And to get back to the entrepreneurial business, I have no doubt
that the wave of unemployment in the past few years has already
lit a fire under the rear ends of hundreds of thousands reluctant
It may be that these people would like nothing more than a nice
steady job with a regular paycheck and a company health plan.
But harsh times are a great motivator, and when people have to
become their own bosses, the results can be spectacular.
And when hiring returns to somewhere near normal and the people
who prefer to be employees can finally find work, there will
remain a huge group of one- and two-person businesses whose
proprietors never want to go back.
They will be bakers, handymen, tech-help gurus, musicians,
artisans and craftspeople who were forced to start their own
businesses. But they will also discover something about the
joy of being your own boss and producing goods and services on
your own terms. And they never want to go back.
And unless I'm very much mistaken, in a few years we may see a
new wavelet of IPOs for companies that got their start in these
hard times at the hands of some very reluctant entrepreneurs.
I could make a parallel point about people who have reluctantly
come to the conclusion that they have to manage their own
It's a daunting task, and one that many people are hopelessly
But it's also true that some people who have been forced to take
a role in managing their own assets have found the challenge
And I hope I may be forgiven for suggesting that the assistance
of one or more of Cabot's fine investment newsletters might be of
material assistance in such an enterprise. (I'm thinking
especially of the
Cabot China & Emerging Markets Report
, probably because I write the useful thing.) I think it's
worth looking into.
With Thanksgiving looming large on the horizon, I'm tempted to
make a list of the things I'm thankful for. That's always a
But since I haven't hit the lottery (in large part because I
don't play the lottery, but let that go), haven't been released
after many weeks of being trapped underground in a coal mine
(same reason) and haven't been given my own reality show (for
which major thanks), my reasons for gratitude are pretty mundane.
If I tried to get beyond the Big Three (family, job, health) into
something a little less generic, I'd say I'm grateful for the
existence of HDTV, for books on paper and books on CDs, for
foreign and art-house movies that don't make it to the Mallplex
theaters, for top-shelf bourbon (Knob Creek at the moment), and
for a large supply of firewood, a few pieces of which can be
sidetracked into carving projects.
But if I can get really idiosyncratic for a moment, I'm grateful
for a chance to communicate with the readers of the Cabot Wealth
Advisory. An interest in investing in individual stocks
isn't all that common. And if you've ever tried to drop a
stock story into the flow of dinner conversation with a group of
non-investors, you know what I'm talking about.
So while I wish a Happy Thanksgiving to everyone, I have a warm
spot in my heart for those who enjoy the challenge (and can
tolerate the occasional kick in the shins) of riding the carnival
ride of the stock market.
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My stock pick for today is
China Southern Airlines (
, which is the dominant passenger, cargo and mail carrier for the
southern provinces of China. Airlines are traditionally
tough ways to make a profit, but the Chinese government's control
of rate structures, routes and operating rules takes a little of
the uncertainty out of the equation for China Southern.
The company's major appeal is its last three quarters of steady
revenue growth (31% in Q1, 52% in Q2 and 48% in Q3) and the huge
earnings growth that can come seemingly out of nowhere, such as
the 816% jump in Q3 earnings.
This isn't a stock for the faint of heart, or for those who like
to invest and forget about it for months at a time. ZNH has
a beta of 1.46, and the chart shows some big volatility.
But the chart also shows a stock that put in a nice base from
April through the end of August, then broke out above 26 on good
volume in September. The stock soared to 39 in late October
before the correction set in. Note that volume is
minuscule, which guarantees high volatility. It's that low
volume that pulls the stock out of consideration for inclusion in
the Cabot China & Emerging Markets Report's portfolio.
But with a P/E ratio of just 7, annual sales or more than twice
its market cap and a generous float of 66 million shares, ZNH can
provide a good opportunity for a trader with the patience to
sharpshoot it near the 50-day moving average.
For more on top Chinese (and other emerging markets stock), check
Cabot China & Emerging Markets Report
, the #1 newsletter for the last five years, according to Hulbert
For Cabot Wealth Advisory