Over the last year, the Dow Jones Transportation index is down over 20 percent. The Transports index is loaded with companies that move goods across the country. It is a price weighted index meaning the highest priced stocks have the greatest influence on its direction. When I think of moving the goods, and how it relates to my family, I think of Christmas. This year, as in years past, Becky and I did a ton of our Christmas shopping online using Amazon Prime—with all those boxes our front hall felt like a fulfillment center. The leading components of the Transportation index are FedEx Corp … [Read more...]
Archives for January 2016
Transports Signal Trouble
Transportation stocks tend to be a leading economic indicator. The theory goes that before you can sell the goods you have to move the goods. Train, plane, and truck businesses are some of the first to see a pickup in demand or a drop in demand. When transportation stocks break down, it is an indication of potential trouble for the market and economy. The Dow Transports have been in a relative downtrend versus the Dow Industrials for the last year and half, and Young Research’s Moving the Goods Index—a measure of the performance of non-airline transportation stocks has also been in a … [Read more...]
Turn $200 into $7 million
A client shared this story with me last week: In 1935 Grace Groner purchased three shares of company stock in Abbott Labs. 75 years later, thanks to the power of compound interest, her three share purchase was worth $7 million. Grace Groner lived nearly her entire life in Lake Forest, Illinois, about 45 minutes north of Chicago. After graduating from Lake Forest College in 1931, Grace was hired as a secretary at Abbott Laboratories, where she worked for more than four decades. Grace never earned an amazing salary as a secretary. According to the Los Angeles Times, she got her clothes … [Read more...]
The Monday Melee: How Low Will Oil Fall?
Morgan Stanley Analysts Predict $20 Oil Brent Crude Drops Below 2008 Lows Prices Near $31/Barrel Today Nicole Friedman writes in The Wall Street Journal: Brent, the global benchmark, fell $2, or 6%, to $31.55 a barrel on ICE Futures Europe, at the lowest level since April 6, 2004. The global crude market is expected to become more oversupplied as soon as this month if sanctions are lifted on Iran, allowing the country to increase its oil exports. “I don’t see the catalyst that’s going to stop us from falling, at this point,” said Scott Shelton, broker at ICAP. While gasoline … [Read more...]
These Commodities are Cheap
The bloodbath in energy and materials sectors of the economy has pushed the real (inflation-adjusted) price of some commodities to multi-decade lows. Aluminum prices are trading near a half century low. Natural gas, wheat, hogs, and steel have also fallen sharply in real terms over the last couple of years. That is not to say that the prices of these commodities can’t fall further. I assure you they can, but if you are looking for contrarian opportunities, these are some rocks to turnover. … [Read more...]
The Year of the Speculator
If you are a serious long-term investor you are no doubt delighted to bid 2015 adieu. Last year was without question a year that favored speculators, traders, and rank amateurs. The big-cap U.S indices managed to eke out positive total returns for the year, but it was a handful of stocks (many of the most speculative variety) that carried the market. The average U.S. stock was down more than 4% last year. Take away Amazon, Netflix, Google, and Facebook and the S&P 500 would have finished in the red. The misery was widespread. The only U.S. equity mutual fund strategy that delivered … [Read more...]
Stock Market on Day One: 2016
Take a look at the first day of trading for 2016 and you’ll see the power counterbalancing can have on your portfolio. This is not a prognostication for the short-term price of gold—it’s a simply an observation of why I rarely sell positions that I value. … [Read more...]
The Monday Melee: 2016, Outlook Not So Good
Markets' Debbie Downer Opening Day Reading through today's headlines on CNBC would give any investor a bit of a stomach ache. Words like stagflation, plunge, burst, shaking, and slowdown were prominent among the titles. There were a few hopeful headlines, but nothing as powerful as the downers. CNBC's Bob Pisani laid out a smorgasbord of reasons the market was down today: 1) A poor U.S. close to 2015. Momentum traders were sure to press the indifferent, lackluster close to what is normally a positive time of the year. 2) China. Not just the disappointing manufacturing numbers, but the … [Read more...]
New Year’s Greetings!
New Year's greetings from America’s premier country inn, The Inn at Little Washington. … [Read more...]