Discipline Crucial, Top Newsletter Editor Says

The Cabot Market Letter is having another market-beating year, and its editor is preaching discipline amid the current market volatility.

“Going forward, it’s important to remember to take your cues from the market itself, and not from the headlines that are sure to push the market up and down in the days ahead,” Michael Cintolo recently wrote to subscribers, according to MarketWatch’s Peter Brimelow. “The goal is to preserve most of your capital today, so that you can make that much more once a new uptrend truly gets underway.”

Brimelow says Cintolo showed his discipline over the past week. On Sept. 21, Cintolo and Cabot said they’d be putting part of the Market Letter portfolio’s substantial cash position back into stocks, as several of its medium-term timing indicators flashed a “buy” signal. (Cabot uses a mix of fundamental analysis and a disciplined market-timing system that focuses on moving averages.) When the market tumbled Thursday, however, Cintolo said that Cabot’s timing system went back into bearish territory. Cintolo stuck to the system, and Cabot quickly sold some positions and downgraded others in its model portfolio, according to Brimelow.

Cabot’s track record is excellent. Over the past decade, its Market Letter portfolio is up 7.56% annualized vs. 3.67% for the dividend-reinvested Wilshire 5000 Total Stock Market Index, Brimelow says. Over the past five years it’s been even better, gaining 13.17% annualized vs. 1.28% for the index.