We evaluate here the stock market commentary of the Cabot Market Letter, published by Cabot Heritage Corporation and currently edited by Michael Cintolo, via MarketWatch.com since late 2002. The available sample encompasses three editors. The Cabot Market Letter “provides expert market timing and a Model Portfolio for traditional growth investors. …Cabot Market Letter has been consistently recognized for outstanding performance by Hulbert Financial Digest and Timer Digest. It was named as one of the Top 10 Letters of 2010 by MarketWatch, one of only nine newsletters in Hulbert’s 2010 Honor Roll for performance in both up and down markets since 1998, and is currently ranked among the Top Ten Newsletters by Timer Digest for long-term performance.” The table below quotes forecast highlights from the cited source and shows the performance of the S&P 500 Index over various numbers of trading days after the publication date for each item. Grading takes into account more detailed market behavior when appropriate. Red plus (minus) signs to the right of specific forecasts indicate those graded right (wrong) based on subsequent market behavior, while red zeros denote any complex forecasts graded both right and wrong. We conclude that:
- According to Peter Brimelow, “Cabot’s disciplined system consists of short- , medium- and long-term indicators based on moving averages; and a tight focus, fundamental and technical, on specific stocks, retreating to stronger performers when times warrant.” This review addresses only the timing aspect of associated performance.
- We do not evaluate Cabot’s public commentary on the Chinese stock market.
- The Cabot Market Letter forecast sample is small, so confidence in the measurement of accuracy is low. Citations are sparse for much of 2004-2007.
Here are additional notes to augment the tabular summary below:
From Peter Brimelow in MarketWatch (8/16/12): “Over the year to date through July, Cabot Market Letter is a respectable 6.9% up by Hulbert Financial Digest count versus 10.37% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. …over the past 12 months, Cabot was down negative 10.37% versus a 7.38% gain for the dividend-reinvested Wilshire 5000. …over the past fifteen years, Cabot is up 5.98% annualized versus 4.76% annualized for the total return Wilshire…”
From Peter Brimelow in MarketWatch (5/10/12): “Over the year to date through April…, Cabot is up 10.7% by Hulbert Financial Digest count vs. 11.96% for the dividend-reinvested Wilshire 5000… Cabot did lose 7.93% over the past 12 months vs. a 3.47% gain for the dividend-reinvested Wilshire 5000. And over the past three years, the letter gained only an annualized 13.85% vs. 19.8% annualized for the total return Wilshire 5000. But over the past five years, the letter was up an annualized 10.89% vs. just 1.33% annualized for the total return Wilshire 5000. Indeed, over the past fifteen years, the letter is up an impressive 8.02% annualized vs. 6.18% annualized for the total return Wilshire…”
From Peter Brimelow in MarketWatch (3/15/12): “Over the year to date through February, Cabot is up 3% by Hulbert Financial Digest count vs. 9.37% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. But over the last 12 months, it was down negative 10.22 vs. a 4.38% gain for the total return Wilshire 5000. …Over past five years, the letter was up an annualized 9.2% vs. just 1.88% annualized for the total return Wilshire. And over the past ten years, the letter was up an annualized 8.49% vs. 5.08% annualized for the total return Wilshire. Over the past fifteen years, Cabot was up 7.28% annualized vs. 6.0% annualized for the Wilshire…”
From Peter Brimelow in MarketWatch (12/29/11): “The ‘Terrible 10’ letters of 2011: …Cabot China & Emerging Markets Report (-27.8%)”
From Peter Brimelow in MarketWatch (9/26/11): “…year to date, Cabot is down just negative 0.2% through August, by the Hulbert Financial Digest’s count. Over the past 12 months, Cabot gained 30.35% vs. 19.06% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. Over the past three years, Cabot is up 9.06% annualized vs. 0.88% annualized for the total return Wilshire 5000. … Over the past five years, Cabot was up an annualized 13.17% vs. 1.28% annualized for the total return Wilshire. Over the past 10 years, the letter was up an annualized 7.56% vs. 3.67% annualized for the total return Wilshire 5000.”
From Peter Brimelow in MarketWatch (12/27/10): The Top 10 [newsletters for 2010]: …7. Cabot Market Letter — 33.2%…”
From Peter Brimelow in MarketWatch (12/9/10): “Over the past 12 months through November, Cabot is up 33.2% by Hulbert Financial Digest count, versus 12.6% for the dividend-reinvested Wilshire 5000 Total Stock Market Index. Over the past three years, which included the Crash of 2008, the letter lost a mere negative 0.4% annualized, versus negative 5.9% annualized for the total return Wilshire 5000. …over the past eight years, the letter was up an annualized 12.1% versus 6.8% annualized for the total return Wilshire 5000. The letter is one of just a handful of those followed by the HFD, whose market timing has beaten a buy-and-hold over the last 15 years on a risk-adjusted basis.”
From Peter Brimelow in MarketWatch (7/22/10): “Over the year to date through June, Cabot’s Model Portfolio is down 5.2% by Hulbert Financial Digest count — a little better than the dividend-reinvested Wilshire 5000 Total Stock Market Index’s negative 5.8%. Over the last 12 months, Cabot was up, but less than the total return Wilshire 5000, 5.7% vs. 15.7%. Over the past three years, however, Cabot achieved a 0.6% annualized gain — which may not sound much but is much nicer than the negative 9.4% annualized of the total return Wilshire. Over the past five years, the letter has achieved a 3.4% annualized gain, versus a negative 0.3% annualized for the Wilshire.”From Peter Brimelow in MarketWatch (6/18/09): “Over the past three years, Cabot has achieved a 6% annualized gain by Hulbert Financial Digest count, compared to a negative 8.18% annualized for the dividend-reinvested Wilshire 5000 Total Stock Market Index total return Wilshire 5000. Over the past five years, the letter has achieved a 3.11% annualized gain, versus a negative 1.26% annualized for the total return Wilshire 5000. Over the past 10 years, the letter has achieved a 3.08% annualized gain, against negative 0.86% annualized for the total return Wilshire. But Cabot did not escape the Crash of 2008 completely unscathed. Over the past 12 months, the letter is down negative 21.96% — still better than the negative 32.63% of the Wilshire. And over the year to date, Cabot is down negative 5.6%, as opposed to a 4.1% gain for the Wilshire.”
From Peter Brimelow in MarketWatch (11/20/08): “Over the year to date through October, Cabot is down just negative 10.9% by Hulbert Financial Digest count, vs. negative 32.9% for the dividend-reinvested Dow Jones Wilshire 5000. Over the past 12 months, Cabot is down a mere negative 17.62% vs. 36.31% for the total return DJ-Wilshire 5000. …ver the past three years, the letter has achieved an annualized gain of 6.24%, vs. negative 5.31% annualized for the total return DJ-W. Over the past 10 years, the letter has achieved a annualized gain of 7.57, vs. 1.26% annualized for the total return DJ-W.”
From Peter Brimelow in MarketWatch (4/23/08): “…it’s the fourth-best performer over the past 12 months according to the Hulbert Financial Digest, up 36.7% vs. negative 5.76% for the dividend-reinvested Dow Jones Wilshire 5000. Over the past five years, Cabot was up a strong 18.99% annualized vs. 12.45% for the total-return DJ-Wilshire 5000.Since the HFD began following Cabot in 1980, the letter has lagged the stock market, achieving a 7.7% annualized gain, vs. 11.5% annualized for the total return DJ-Wilshire. This probably reflects changes in editors and technique.”From Peter Brimelow in MarketWatch (12/27/07): “This year’s Top Ten…[5.] Cabot Market Letter 37.5%…”
From Peter Brimelow in MarketWatch (11/28/07): “Cabot Market Letter is the fifth-ranked investment letter over the last 12 months, according to the Hulbert Financial Digest, up 57.5% through the end of October vs. 15.06% for the dividend-reinvested Dow Jones Wilshire 5000. Over the past 10 years, it’s up 8.72% annualized vs. 7.4% for the DJ Wilshire… The letter is one of just a handful that have beaten the market over the last 15 years…”
See Guru Grades for a snapshot of the accuracy of various experts in predicting the direction of the U.S. stock market, including links to evaluations of the commentaries of other individual market pundits and gurus.
| S&P 500 Index | ||||||
| Date | Comments re: Cabot Market Letter at MarketWatch | 21-Day Return | 63-Day Return | 126-Day Return | 254-Day Return | |
| 8/30/12 | “Remain optimistic…our indicators remain in great shape… We’re going to do a little more buying tonight, leaving us with a cash position of around 17%.” | 3.2% | 1.2% | 10.0% | 18.3% | + |
| 8/16/12 | “…the market continues its slow-but-steady improvement – our market timing indicators are looking better…we’re adding two new stocks tonight, leaving us with about 33% in cash.” | 3.2% | -4.4% | 8.2% | 17.1% | + |
| 7/9/12 | “Now’s a time to come off the sidelines and begin putting some money to work.” | 3.6% | 8.1% | 7.7% | 24.4% | + |
| 5/31/12 | “Remain defensive. [We have] a hefty 58% cash position. …sit back and let the market chop around…” | 4.0% | 7.6% | 8.1% | 23.8% | – |
| 5/10/12 | Cabot is currently about two-thirds in stocks… “Overall, the evidence still points toward this being a correction within a general bull trend…the odds still favor higher prices down the road; it’s certainly possible this week’s panicky action is bringing us close to some sort of low.” | -3.6% | 3.3% | 1.4% | 21.5% | + |
| 3/15/12 | “Remain bullish. The market remains in a firm uptrend… Cabot is…86% invested… | -2.4% | -2.4% | 2.4% | 10.2% | – |
| 12/5/11 | …Cabot is still “holding a cash position of 73%. “You should remain defensive for now…” | 1.9% | 6.9% | 2.3% | 12.8% | – |
| 11/28/11 | …Cabot is 73% in cash. “We are still optimistic that the market is transitioning from bear to bull, but today’s action tells us more patience is needed. …The order of the day is protecting your capital…” | 4.8% | 15.1% | 11.7% | 18.2% | – |
| 9/29/11 | As of last night, Cabot remained bearish… “…the Model Portfolio…has a hefty 67% cash position.” | 10.7% | 7.7% | 20.9% | 24.6% | – |
| 9/26/11 | “This clearly pushes our Cabot Tides back into the bearish column.” | 5.7% | 7.8% | 21.8% | 24.4% | – |
| 8/15/11 | “…right now, it’s time for defense — protect your capital by holding cash and, should we get a bounce of a few days, selling some shares into it.” | -1.3% | 2.9% | 12.2% | 17.5% | – |
| 5/19/11 | Cabot has been edging for the exit. …After pruning its weaker performers, as is its practice, it’s now 52% in cash. “…whether it’s next week or in six weeks, we expect the bulls to retake control and another round of profit opportunities to present themselves.” | -4.9% | -11.1% | -6.4% | -2.0% | + |
| 3/7/11 | “…rid your portfolio of your losers and laggards, hopefully during bounces…cut back on most (though not all) new buying for now. But we don’t think it’s time to jettison all your profitable stocks, or to totally hide out in the storm cellar. All of the above refers to the short-to-intermediate term. Looking at the longer term, we see no signs that the market is at the front-edge of a real bear phase.” | 1.7% | -0.8% | -8.1% | 4.3% | + |
| 1/3/11 | “In sum, we remain bullish…yet we are aware of the growing possibility of a substantial correction as the New Year gets under way.” | 2.5% | 4.8% | 5.3% | 0.7% | + |
| 12/9/10 | “…the month will end with a bang, perhaps even a buying panic, as professional investors clamber onto the fastest horses so their year-end snapshots look good. …the bull market will run into the spring.” | 3.0% | 5.0% | 4.5% | 0.3% | + |
| 10/21/10 | “…some choppiness is likely… But all of our market timing indicators tell us the bull trend is healthy and intact, so you should continue to expect higher prices over time.” | 1.6% | 8.5% | 12.7% | 6.3% | + |
| 8/16/10 | “…we’re still more positive than negative. But…as long as market leadership remains narrow, we’ll remain apprehensive. …while the new buy signal is another breeze at the market’s back, we wouldn’t put more money to work because of it.” | 4.2% | 12.4% | 23.1% | 10.6% | – |
| 8/2/10 | “With a Dow low of 9,687, a rally into 2011 could carry the index well above 13,000 and even to 14,000. It might sound crazy, but history suggests it’s not just possible, but likely!” | -6.8% | 5.1% | 13.4% | 11.9% | + |
| 7/22/10 | “Our Cabot Tides flashed a buy signal today…, so it’s time to put a line back in the water…bringing our cash position back down to about 50%…” | -2.0% | 6.6% | 17.2% | 22.3% | 0 |
| 12/22/09 | “The charts are bullish; the most bullish thing a stock can do is go up, and the majority are doing just that.” …however, Cintolo is keeping 30% of his newsletter’s model portfolio in cash. | -1.9% | 4.4% | -2.3% | 12.5% | 0 |
| 7/9/09 | “The Model Portfolio will have around 45% cash after these sales, which seems appropriate for now. Longer-term, we remain optimistic that this is a bull market correction, and that the best leaders are building launching pads. But for now, playing defense until the selling is finished is your best move.” | 14.5% | 19.5% | 28.8% | 24.1% | – |
| 6/18/09 | …Cabot Market Letter’s Michael Cintolo came out last night…unflinchingly making the case that “the bull market is not over yet.” | 3.6% | 16.4% | 20.6% | 19.3% | + |
| 5/4/09 | Cabot’s long-, medium- and short-term technical indicators are now all bullish. He is back in stocks, although not yet completely. | 2.7% | 8.8% | 17.5% | 24.3% | + |
| 3/26/09 | Its short- and medium-term indicators have turned positive. Cabot is now 25% invested… | 3.0% | 8.2% | 27.4% | 40.9% | – |
| 3/16/09 | “…our Model Portfolio remains 100% in cash! …we’ll be very willing to buy aggressively as soon as our indicators give us the signal.” | 13.0% | 25.5% | 38.3% | 54.6% | – |
| 11/20/08 | …Cintolo is out of the market right now. | 15.8% | -1.2% | 17.9% | 46.9% | – |
| 10/9/08 | “Remain defensive…” | 2.3% | 0.0% | -5.9% | 17.9% | + |
| 7/2/08 | “Our market-timing indicators are still clearly negative.” It is raising its cash position to some 65%. | -0.1% | -7.5% | -29.4% | -30.2% | + |
| 6/25/08 | After selling some stock recently, it’s down to 50% cash. In a hotline Wednesday night, it summarized: “Remain defensive. The bears are not exactly running wild on Wall Street, but the trend of the market and most stocks is down.” | -4.9% | -10.1% | -34.1% | -29.9% | + |
| 5/1/08 | “Remain optimistic. Although the bulls aren’t running wild, the market is making decent progress, and more stocks are acting better … go slow, pick your spots, and keep some cash on the sideline.” | -2.0% | -9.2% | -33.5% | -36.1% | – |
| 4/23/08 | Cabot says that subscribers should be “leaning bullish,” but that “we’re still in the first innings.” | 1.0% | -7.5% | -30.8% | -37.9% | – |
| 3/6/08 | “Continue to hold plenty of cash on the sideline, but… right now, neither the bulls nor the bears are truly in control of this market.” | 5.2% | 5.6% | -2.3% | -44.8% | + |
| 1/10/08 | “The market remains under pressure, and we continue to counsel caution. Sometime in the future this weakness will end and the uptrend will resume, but until then the prudent course is to conserve cash. Wait until the market is on your side.” | -5.7% | -4.2% | -11.8% | -38.6% | + |
| 11/28/07 | “Bottom line, the sellers are now in control, which means preservation of cash is your number one priority.” | 0.6% | -6.9% | -4.8% | -44.4% | + |
| 4/18/06 | Editor Timothy Lutts acknowledges that the market’s “internal health” has weakened in recent sessions. But he adds that he is “not terribly concerned at this point,” since “nothing seems overheated about this market.” His best guess at this point is a 5% correction. | -2.9% | -5.6% | 4.4% | 13.3% | + |
| 8/1/05 | Cabot Market Letter: Bullish. Editor Timothy Lutts believes the stock market is in “great shape … all the major indexes are perched above even their 25-day moving averages, while their more-important 50-day moving averages trail behind.” Further gains are likely, in Lutts’ opinion. | -2.2% | -4.6% | 4.0% | 3.6% | – |
| 6/29/05 | “We expect that this [recent weakness] will be merely a normal correction, which will cause a little pain and thus set the psychological stage for the renewed advance.” | 2.9% | 1.3% | 4.7% | 6.7% | + |
| 8/9/04 | “We’re optimistic that the year will end on a positive note, as election years often do; and we’re optimistic… that 2005 and 2006 will be highly profitable years.” | 4.8% | 9.1% | 12.9% | 15.4% | + |
| 5/31/04 | “the intermediate trend remains down, until proved otherwise.” | 0.7% | -2.0% | 5.1% | 6.7% | + |
| 5/6/04 | “All in all, it’s once again time to become somewhat cautious…” | 2.4% | -3.0% | 2.6% | 4.7% | + |
| 12/10/03 | “…we see the lack of out-and-out enthusiasm as a positive sign for the market over the longer-term. So you should remain bullish…” | 6.4% | 4.5% | 7.3% | 13.6% | + |
| 9/11/03 | Carlton Lutts of Cabot Sector Inspector comfortingly assumes the bear market is over. He wrote last night: “The current pullback could easily persist a bit longer.” | 2.1% | 4.3% | 8.9% | 10.2% | 0 |
| 9/1/03 | “The market is healthy at this time. Thus, you should remain fully invested in the recommended issues. …For now, our advice is to stay bullish and stay tuned!” | -0.4% | 3.5% | 12.4% | 9.0% | + |
| 7/29/03 | Cabot Market Letter, Carlton Lutts; 100 percent… | 0.8% | 4.0% | 15.6% | 11.9% | + |
| 5/2/03 | The Cabot Market Letter’s Carlton Lutts has also increased his exposure to the stock market, from 75 percent to 100 percent. | 4.5% | 6.5% | 12.7% | 20.6% | + |
| 3/21/03 | One of the few to have increased his exposure to the stock market is Cabot Market Letter’s Carlton Lutts. He’s up from 20% to 30%. | 1.7% | 11.0% | 16.1% | 21.8% | + |
| 1/2/03 | Cabot Market Letter (Carlton Lutts): Bullish; 85 percent invested… | -5.4% | -3.1% | 9.3% | 23.6% | – |
| 11/25/02 | Cabot Market Letter (Carlton Lutts): 70 percent invested … | -4.6% | -11.3% | 2.2% | 13.4% | – |
| 10/7/02 | The outright bears: …Cabot Market Letter’s Carlton Lutts … | 16.6% | 18.3% | 12.1% | 32.3% | – |
| 8/1/02 | Cabot Market Letter’s Carlton Lutts is 85 percent in cash and not convinced there’s been a low. | 3.6% | -0.3% | -4.5% | 9.1% | + |
