Daily Gains Letter

Old Economy

Old economy refers to a group of established businesses operating in a mature industry that don’t have to necessarily be traditional, industrial corporations. Not to the exclusion of technology companies, the phrase “old economy” highlights traditional bricks-and-mortar businesses.

Why Plunging Commodity Prices Are Great for the Stock Market

170413_DL_clarkThe big drop in the value of many commodities is very good news for this stock market. All of a sudden, raw materials are cheaper in price. This is going to translate right to the bottom line of many corporations. And one of the best developments is the weaker price of oil. Big oil stocks have done consistently well in the stock market, but smaller corporations have struggled due to the fact that the spot price has not been able to move much past the $95.00-per-barrel level. Now that spot oil is below $90.00 a barrel, transportation stocks are really going to benefit. Of course, it takes time for big oil corporations to reduce gasoline prices. It’s common knowledge that when the spot price of oil spikes, gasoline ... Read More

Why the Dow Theory Indicator Needs to Confirm This Stock Market

160413_DL_clark The Dow Jones Transportation Average continues to be one of the most important stock market sub-indices to follow. The Dow Jones Transportation Average is an old economy gauge, one that is part of Dow theory, and its movements are meaningful in that component companies are the backbone of the U.S. economy, just like the Dow Jones Industrials. J.B. Hunt Transport Services, Inc. (NASDAQ/JBHT) is an important benchmark stock on the Dow Jones Transportation Average. The company just reported solid revenue growth, with good earnings that just missed consensus. According to the company, its revenues for the first quarter of 2013 were $1.3 billion, a gain of about 10.7%. Earnings were $73.3 million, or $0.61 p ... Read More

Avoid the Eurozone Mess: How to Profit Domestically

280313_DL_clarkMost investors will consider utility stocks in saving for retirement, or when looking for regular stock market income while in retirement. This is a group that has a better track record on the stock market than you might think. Old economy stocks can still generate solid investment returns, even if they are well-established utilities. The Dow Jones Utility Average has a good long-term track record of wealth creation, but it has not been without volatility. Clearly this is a group that is less volatile than many other stock market sectors and these stocks experience waves of enthusiasm from institutional investors. Utility stocks are not for everyone. A lot of investors feel that they would be better off in f ... Read More

Stock Market Advance Needs Technology Stocks to Step It up a Notch

260313_DL_clark Most components of the Dow Jones Industrial Average are doing well—some exceptionally well. Alcoa Inc. (NYSE/AA) is one of the laggards, and really, all the position has done on the stock market is return to its historical norm. The company reports in a couple of weeks, and it is currently richly valued on a price-to-earnings (P/E) ratio. The opposite of Alcoa’s position is 3M Company (NYSE/MMM), which is trading at an all-time record high on the stock market and is not expensively priced. This Dow Jones component has basically been ticking higher since the beginning of 1962. It traded sideways between 2005 and 2012, but it’s a consistent winner for sure. The Dow Jones Transportation Average and th ... Read More

Breakout in Transportation Stocks Gains Strength—How to Play the Disconnect

130313_DL_clarkThe Dow Jones Transportation Average experienced a powerful breakout this past December. And it’s been a stealth rally ever since, with an expansion in valuations, not earnings. The stock market’s strongest sector over the past few months has been transportation stocks, which have been much stronger than technology stocks or the S&P 500 companies. Even though it doesn’t seem real, leadership in the Dow Jones Transportation Average is a classic stock market sign. Helping the cause are lower oil prices. Countless names among large-cap transportation stocks are soaring. And at new 52-week highs, they still aren’t expensively priced on the stock market, which means they can go higher. The stock ma ... Read More