These Dow Averages Are Crushing the Industrials

Want a winner in 2014? Pick anything but the Dow Jones Industrials.

Apr 19, 2014 at 9:05AM

The Dow Jones Industrials (DJINDICES:^DJI) has frustrated investors so far in 2014, with the venerable average having lost about 1% year-to-date despite its substantial rise last week. But the most frustrating thing about the Dow's poor performance is that the other two Dow averages -- the Dow Jones Transportation Average (DJINDICES:DJT) and the Dow Jones Utility Average (DJINDICES:^DJU) -- have posted much better returns, with the Transports actually having set a new all-time record high earlier this month.

^DJI Chart

Dow data by YCharts.

The Dow Transports have largely been firing on all cylinders over the past year, as airlines, railroads, and delivery-service stocks have all shown substantial gains. An improving economy has bolstered confidence in future demand for shipping goods, and despite relatively high fuel costs, measures to make transportation more fuel-efficient have had a positive impact on profitability. The fact that major airlines are all profitable and making huge orders for newer aircraft that are cheaper to operate shows the turnaround for the transportation industry, and railroads have ridden the trend toward more fuel-efficient transportation for nearly a decade now, ever since oil prices started soaring in the mid-2000s. Finally, popular shifts in consumer behavior like the move toward online shopping have increased the importance of the Transports, and as shipment volumes grow, the capacity for growth in the companies that make those shipments possible also rises.

Meanwhile, the Dow Utilities have posted even bigger gains due to a confluence of factors. First of all, with high-priced momentum stocks having come under pressure lately, the natural response among investors is to gravitate toward those stocks perceived as being least risky, and utilities have the reputation of being conservative in nature. In addition, high demand for utility services during the long winter season has led to calls for price increases among regulated utility companies and has also raised volume, which could lead to higher revenue and profits when utility stocks announce first-quarter earnings results. Lastly, the expected jump in interest rates this year hasn't yet happened, and so utility stocks -- which tend to be rate-sensitive -- haven't seen the downward pressure most investors expected.

Just because the Dow Jones Industrials have underperformed the Utilities and Transports so far this year doesn't mean that the Dow won't take back supremacy over its index siblings later in 2014. For now, though, those looking for Dow records will have to look beyond the Dow Jones Industrials for satisfaction.

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4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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