Saddle Up for the Straight Talk Express

While some investors crave optimistic reassurance about a road to recovery paved with stimulus and lined with green shoots, this Fool is interested only in straight talk.

Separating straight talk from spin can be tricky, but when corporate executives express views that could chase you out of their sector for a time, then you know you have boarded the corporate version of the “Straight Talk Express.”

I've identified straight talkers for each of the sectors I follow closely:

  • For sticking his neck out to warn of a potential catastrophe facing dry bulk shippers and their financiers, Anastassis Margaronis of Diana Shipping (NYSE: DSX  ) earns this Fool's straight-talk badge of honor.
  • For pointing out the inconvenient truth that China's commodity buying spree does not equate to sustainable demand resumption, Joy Global's (Nasdaq: JOYG  ) Michael Sutherlin takes the prize.
  • For upstaging Lakshmi Mittal of ArcelorMittal (NYSE: MT  ) with an unabashed reality check regarding the American economy and its struggling steel industry, Nucor's (NYSE: NUE  ) Daniel DiMicco is this Fool's newest champion for truth in a world full of parroting cheerleaders.

When the CEO of the nation's top steelmaker tells you "we are in for a prolonged and slow recovery" and that "you best be prepared for it if you're going to be a survivor," Fools are advised to take note. Remember, it's customary for CEOs to downplay challenges and instill confidence among investors. Keep that in mind as we consider what DiMicco said next:

This will be the longest jobless recovery in U.S. history ... the granddaddy of all jobless recoveries. I'm afraid we are "plateaued" out.

It sounds like he's describing a full-fledged depression … a word few have been willing to toss around since this equity rally sprouted in March. Indeed, DiMicco asserts a real jobless rate of 16% -- and atrocious outlooks for construction and automotive manufacturing (through at least 2012) -- as the writing on the wall. Keep DiMicco's perspective in mind when assessing the wisdom of a stake in Ford (NYSE: F  ) , the valuation of a construction play like USG (NYSE: USG  ) , or the likely impacts of another wave of mortgage defaults on the likes of Bank of America (NYSE: BAC  ) .

Readers of my CAPS blog know that I've been using the dreaded D-word since early 2008 (I'm a laugh a minute at parties). Thoughts of a protracted depression to rival the experience of our forbears are unnerving, to say the least, and I completely understand the attachment to optimistic scenarios. Like Daniel DiMicco, though, I value earnest discussion and comprehensive analysis over the temptation of wishful thinking.

Further Foolishness:

Fool contributor Christopher Barker is the Nat King of Coal and the wild boar of iron ore. He can be found blogging actively and acting Foolishly in the Motley Fool CAPS community under the user name TMFSinchiruna. He owns shares of Diana Shipping. USG is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (17)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 29, 2009, at 3:44 PM, ChannelDunlap wrote:

    So the straight-talkers are the bears? Can it really be there are NO straight talking bulls? Or even straight talking moderates? How 'bout uncertain straight talkers? None of them either? Incredible. It appears that the only smart people are the ones who agree with you. I love when that happens.

  • Report this Comment On June 29, 2009, at 4:00 PM, castonic wrote:

    "I'm afraid we are "plateaued" out.

    It sounds like he's describing a full-fledged depression!"

    Can you explain how "plateaued out" is consistent with a "full-fledged depression?" Might it be that you've gone a little too emotional with this piece yourself?

  • Report this Comment On June 30, 2009, at 9:39 AM, XMFSinchiruna wrote:

    Castonic,

    16% unemployment, the granddaddy of all jobless recoveries, no return meaningful return of automotive or construction demand before 2012 ... tacking those metrics onto what is already conventional wisdom about the state of the economy, and there is no getting around the d-word.

    Did you not find it even slightly ironic that the recession wasn't officially declared a recession until a full year after it began? It will be the same here ... it will eventually be termed a depression by the official sources ... way too late to be helpful to anyone.

    It is here, and now.

    ChannelDunlap,

    I'm sorry if that's the interpretation you walk away with here ... that certainly does not characterize my view. You can obviously have straight talkers discussing all kinds of topics, including bull markets. All I was saying is that when CEOs paint a scary picture for their own sectors, then you KNOW it's straight talk ... because the content runs counter to their own vested interest in promoting investor confidence.

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