Download - Sl12 year in review and state of cabot
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23rd AnnualInvestment Conference & Luncheon
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Dennis Wassung, Jr., CFA®
Portfolio Manager
Cabot Money Management, Inc.216 Essex Street
Salem, Massachusetts 01970800-888-6468 eCabot.com
Cabot’s Year in Review
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2012 By Asset Class
2012 thru 9/21/12
NASDAQ
S&P 50
0
REITS
SMALL C
APS
MID
CAPS
FOREIGN D
EVELOPED
GOLD
EMERGIN
G MARKETS
COMM
ODITIE
S
BONDS0%
5%
10%
15%
20%
25%
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2012 By Country: Top & Bottom 5
2012 thru 9/21/12
EGYPT
TURKEY
THAILAND
GERMANY
INDIA
UNITED STATES
ARGENTINA
ISRAEL
CHILE
SPAIN
CHINA (SHANGHAI)
-10% 0% 10% 20% 30% 40% 50% 60%
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2012 By Sector
2012 thru 9/21/12
TELECOM S
VC.
INFORM
ATION T
ECH
FINANCIA
LS
CONSUMER D
ISCR
HEALTH CARE
MATERIA
LS
CONSUMER S
TAPLES
INDUSTRIA
LS
ENERGY
UTILIT
IES
0%
5%
10%
15%
20%
25%
30%
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2011 U.S. Equity Market Performance
2011 Full Year12/31
/2010
1/13/2
011
1/26/2
011
2/8/20
11
2/21/2
011
3/6/20
11
3/19/2
011
4/1/20
11
4/14/2
011
4/27/2
011
5/10/2
011
5/23/2
011
6/5/20
11
6/18/2
011
7/1/20
11
7/14/2
011
7/27/2
011
8/9/20
11
8/22/2
011
9/4/20
11
9/17/2
011
9/30/2
011
10/13
/2011
10/26
/2011
11/8/
2011
11/21
/2011
12/4/
2011
12/17
/2011
12/30
/2011
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
S&P 500
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2011 & 2012 U.S. Equity Market
12/31/10 to 9/21/1212
/31/20
10
1/20/2
011
2/9/20
11
3/1/20
11
3/21/2
011
4/10/2
011
4/30/2
011
5/20/2
011
6/9/20
11
6/29/2
011
7/19/2
011
8/8/20
11
8/28/2
011
9/17/2
011
10/7/
2011
10/27
/2011
11/16
/2011
12/6/
2011
12/26
/2011
1/15/2
012
2/4/20
12
2/24/2
012
3/15/2
012
4/4/20
12
4/24/2
012
5/14/2
012
6/3/20
12
6/23/2
012
7/13/2
012
8/2/20
12
8/22/2
012
9/11/2
012
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
S&P 500
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2012 U.S. Equity Market
2012 thru 9/21/1212/3
0/20
11
1/9/
2012
1/19
/201
2
1/29
/201
2
2/8/
2012
2/18
/201
2
2/28
/201
2
3/9/
2012
3/19
/201
2
3/29
/201
2
4/8/
2012
4/18
/201
2
4/28
/201
2
5/8/
2012
5/18
/201
2
5/28
/201
2
6/7/
2012
6/17
/201
2
6/27
/201
2
7/7/
2012
7/17
/201
2
7/27
/201
2
8/6/
2012
8/16
/201
2
8/26
/201
2
9/5/
2012
9/15
/201
20%
2%
4%
6%
8%
10%
12%
14%
16%
18%
S&P 500
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2012 U.S. Equity Market
2012 thru 9/21/12
12/30
/2011
1/8/20
12
1/17/2
012
1/26/2
012
2/4/20
12
2/13/2
012
2/22/2
012
3/2/20
12
3/11/2
012
3/20/2
012
3/29/2
012
4/7/20
12
4/16/2
012
4/25/2
012
5/4/20
12
5/13/2
012
5/22/2
012
5/31/2
012
6/9/20
12
6/18/2
012
6/27/2
012
7/6/20
12
7/15/2
012
7/24/2
012
8/2/20
12
8/11/2
012
8/20/2
012
8/29/2
012
9/7/20
12
9/16/2
012
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
S&P 500
What’s On The Horizon?
?
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Stocks vs. Bonds (2011 & 2012)
12/31/10 to 9/21/1212
/31/
2010
1/18
/201
1
2/5/
2011
2/23
/201
1
3/13
/201
1
3/31
/201
1
4/18
/201
1
5/6/
2011
5/24
/201
1
6/11
/201
1
6/29
/201
1
7/17
/201
1
8/4/
2011
8/22
/201
1
9/9/
2011
9/27
/201
1
10/1
5/20
11
11/2
/201
1
11/2
0/20
11
12/8
/201
1
12/2
6/20
11
1/13
/201
2
1/31
/201
2
2/18
/201
2
3/7/
2012
3/25
/201
2
4/12
/201
2
4/30
/201
2
5/18
/201
2
6/5/
2012
6/23
/201
2
7/11
/201
2
7/29
/201
2
8/16
/201
2
9/3/
2012
9/21
/201
2-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Stocks Bonds
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Stocks vs. Bonds in 2012
2012 through 9/21/12
12/3
0/20
11
1/7/
2012
1/15
/201
2
1/23
/201
2
1/31
/201
2
2/8/
2012
2/16
/201
2
2/24
/201
2
3/3/
2012
3/11
/201
2
3/19
/201
2
3/27
/201
2
4/4/
2012
4/12
/201
2
4/20
/201
2
4/28
/201
2
5/6/
2012
5/14
/201
2
5/22
/201
2
5/30
/201
2
6/7/
2012
6/15
/201
2
6/23
/201
2
7/1/
2012
7/9/
2012
7/17
/201
2
7/25
/201
2
8/2/
2012
8/10
/201
2
8/18
/201
2
8/26
/201
2
9/3/
2012
9/11
/201
2
9/19
/201
2-5%
0%
5%
10%
15%
20%
Stocks Bonds
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Equity Markets Have Long-Term Value:Dividend Yield Is Higher Than 10-Year Treasury Yield
1998-Current
7/3/
1998
12/3
/199
8
5/3/
1999
10/3
/199
9
3/3/
2000
8/3/
2000
1/3/
2001
6/3/
2001
11/3
/200
1
4/3/
2002
9/3/
2002
2/3/
2003
7/3/
2003
12/3
/200
3
5/3/
2004
10/3
/200
4
3/3/
2005
8/3/
2005
1/3/
2006
6/3/
2006
11/3
/200
6
4/3/
2007
9/3/
2007
2/3/
2008
7/3/
2008
12/3
/200
8
5/3/
2009
10/3
/200
9
3/3/
2010
8/3/
2010
1/3/
2011
6/3/
2011
11/3
/201
1
4/3/
2012
9/3/
2012
0%
1%
2%
3%
4%
5%
6%
7%
8%
S&P 500 Dividend Yield 10-Year Treasury Yield
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Equity Markets Have Long-Term Value:Stocks Are Still “Cheap”
1976-Current
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Dec-
10
Dec-
15
Dec-
20
Dec-
25
Dec-
30
Dec-
35
Dec-
40
Dec-
45
Dec-
50
Dec-
55
Dec-
60
Dec-
65
Dec-
70
Dec-
75
Dec-
80
Dec-
85
Dec-
90
Dec-
95
Dec-
00
Dec-
05
Dec-
10
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
Rolling 10-Year Annualized Total Return of the Dow Jones Industrial Average (1910 - Present)
Equity Markets Have Long-Term Value:10-Year Rolling Returns Still Favor Stocks
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One of the Classic“Stock Market Rules”
The Stock Market climbs a “Wall of Worry”
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William Larkin, Jr.Portfolio Manager
Cabot Money Management, Inc.216 Essex Street
Salem, Massachusetts 01970800-888-6468 eCabot.com
Cabot’s Year in Review - Bonds
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Federal Reserve Policies Dominate The Markets
0%
QE3
JOBS
Removes Safe Investment Options From The Bond Market
Targets Interest Rates Across All Maturities
The Employment Mandate Forces The Economic Recovery
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Credit Dries Up
Valuations Fall
Production Slows
Confidence is Lost
Market Fear Spreads
Panic
Excessive Pessimism
Cash Hoarding
Principal Preservation
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Excessive OptimismHistoric Investment Opportunities
Economy StabilizesInitial Hiring Starts
Confidence Recovers
Pricing Improves
Market Confidence Spreads
Investors Begin Re-allocation to Risk
Recovery Becomes More Mainstream
Reaching for Yield
Consumer Demand Returns
Productions Increases
Panic Subsides
A
B
C
X
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US Treasury Securities
Mortgage Securities
Bond Mkt Corporate Bonds
High Yield Bonds
Emerging Market Debt
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
1.67%2.89% 3.40%
5.93%
9.06%
16.34%
2012 Performance (Year-To-Date Returns)
Gov’t Backed Moderate Risk High Risk
Reaching For Yield
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A Professional New Approach Is Required
Buy & Hold No Longer Works
Indexing Is Dangerous
Risk Management is
Required
Opportunities Require Flexible
Non-Core Strategies
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State of Cabot
Robert T. Lutts President & CIO
Cabot Money Management, Inc.216 Essex Street
Salem, Massachusetts 01970800-888-6468 eCabot.com
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State of Cabot
Cabot Technology Platform Expanding – Best Practices Thinking Phones
Salesforce.com – Integration with Schwab - Custodians
Hosted Networks – Cloud Computing
Installing Power Backup Generator
Staff Education – High Investment – Expanding Conferences, Seminars, World Travel
Continue to Seek To Upgrade our Skills and Abilities
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Cabot Investment Offerings New Equity Dividend-Oriented Portfolio – Stock Dividend – 3.5% yield
Cabot’s knowledge and Use of New ETFs Expanding
Fixed Income – Use of New Fixed Income products expanding
Wealth Management Team – Best Practices Seminars and further education
Advanced Degrees – Taxes, Estate Planning and Insurance work
Staff Conferences, Seminars, World Travel
State of Cabot
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23rd AnnualInvestment Conference & Luncheon