2012年11月12日星期一

Is a recovery in transportation stocks good news for the wider economy?

Clandestine passengers in those old Western films always knew that the best time to get on board was when the train was still going slow. Once the engine started to move at full throttle, the whole exercise acquired a suicidal taste.Posts with indoor tracking system on TRX Systems develops systems that locate and track personnel indoors. Quite a few experienced equity investors have a similar view. The time to get into the market is right after it touches bottom, and share prices are about to gain steam. That could be the case with transportation stocks, a sector that has suffered severely in the past five years, and could see a reversal of fortunes in the near future.

Or maybe it could not.The howo truck is offered by Shiyan Great Man Automotive Industry, It can be argued that the fate of companies that depend on the transport of passengers or goods is closely correlated with the performance of the broader economy. So if you believe that the woes of Europe, the US and Japan are a long way from being over, trains, ships and airplanes are unlikely to be your thing. In fact, there is a school of thought according to which the performance of transportation stocks provides a reliable predictor of how equity markets as a whole will fare in the near future. If that is really the case, the best is to fasten your seat belt and brace yourself for more periods of turbulence.

In the past five years, the Dow Jones Transportation Average, an index made out of transportation stocks traded in the US, have gone through a considerably bumpy road. From a peak of more than 5,400 points that it reached in the happy days of April 2008, the index fell to less than 2,150 in March 2009. The false start of the first half of 2011 took the index up to more than 5,500 points by July that year, only to see it drop to below 4,000 points a mere three months later. In 2012, the DJTA delivered a tad over 2 per cent by early November. Which was of course six times less than what the S&P 500 index of the US’s largest blue chips.

The trajectory of the DJTA so far this year could imply it is either time to get into the transportation sector without further delay,Find detailed product information for howo spare parts and other products. or to get out of equity markets entirely. This is because, depending on the school of thought that an investor subscribes to, such stocks should either follow the way the broader economy goes, or to predict the future performance of markets.Find detailed product information for howo tractor and other products.

The latter includes proponents of the Dow Theory, one of which proposes that companies that take merchandise from one point to another will be the first to benefit from a recovery of confidence among producers of industrial goods. However economists have asserted that the sector not only is reactive, rather than predictive, to other economy trends, but it also has tended to move in either direction more dramatically than GDP.

The Dow Theory dates back to the early 20th Century and for many economists it reflects a kind of economy that has completely changed in past decades.

“I don’t think transportation stocks are leading indicators of where the economy is heading,” says Alastair Gunn, a UK equities fund manager at Jupiter. “But they are good proxies for what is happening in the economy.”

Some analysts say the sector is in fact very broad and offer opportunities for several kinds of plays. In a recent interview to the Wall Street Transcript, Jefferies & Co analyst Peter Nesvold noted that some activities, like the transport of goods by lorry companies, follow the economic cycle instantly, while others, such as rails, tend to react more slowly. According to him, even those who like to bet against the tide can find opportunities in the sector, as logistics stocks have a tendency to be countercyclical.

Even within a sub-sector of the transportation industry the variations can be considerable, requiring careful analysis from investors. Moving people, for instance, is an activity less subject to dramatic ups and downs than carrying goods.

“Freight traffic is more exposed to the economic cycle than passenger traffic,” says Thomas Bücher, manager of the DWS Global Infrastructure fund. “As the economy goes down,Find detailed product information for howo spare parts and other products. it is the freight traffic that suffers the biggest falls of volume.”

The German economist Werner Rothengatter has noted that the current crisis has made this fact more evident than ever before. While long distance passenger transport fell 5 per cent in the rich world in 2009, international freight transport dropped by twice as much, he wrote in a report.

Flagship airlines have struggled as tourists and business travelers have became more aware of their travel costs. However low-cost alternatives have thrived as people who in other times would not even consider making a trip without a free meal have been forced to eat their pride instead.

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