Can Transports Send the Dow to New Record Highs?

Strength in the Dow Jones Transports could help lead the Industrials higher. Find out how transportation stocks fared this week.

May 4, 2014 at 8:00AM

Among the Dow averages, most investors focus on the Dow Jones Industrials (DJINDICES:^DJI), because they encompass the widest range of industries. But the Dow Jones Transportation Average (DJINDICES:DJT) is also important, and lately, its strength has been more impressive than the tepid gains from the Dow Jones Industrials. Let's take a look at why strength in marine-delivery company Kirby (NYSE:KEX) led the Transports higher, while railroad giant CSX (NYSE:CSX) held the average back, and how prospects for both could have an impact on the Dow.


Source: Kirby.

Kirby's strong performance came after the company reported solid earnings Wednesday night, lifting the stock up 6% for the week. Kirby's first-quarter results included record earnings per share, with net income rising almost 10% on a 5.4% jump in revenue. Despite some negative impact from winter weather, Kirby said that its marine markets have seen high demand that have helped the company gain pricing strength. Inland and coastal utilization rates were in the 90% to 95% range, with strengthening operating margins helping the marine division's profitability. Although barges aren't the sexiest part of the transportation business, they play a vital role in moving goods, and strength from Kirby means that the customers that rely on Kirby to get their products to market are looking healthier than in the past.


Source: CSX.

Meanwhile, CSX saw modest declines of around 1% after one of its trains derailed in Virginia. The train, which was carrying oil, caught on fire, and investors fear that the long-term impact of the derailment might be a more critical look at the practice of having railroads transport crude oil and other energy products. CSX and its railroad peers have relied on the need for oil producers to transport crude from hard-to-reach shale plays, and any regulation could crush what has been a vital source of revenue at a time when other commodities have seen prices plunge.

From a broader perspective, railroads and marine transportation play a key role in economic activity. Although they're not as familiar to average consumers as airlines or overnight-shipping companies, the companies in the Dow Jones Industrials rely on them as a vital link between production and consumption. If the Transports keep faring well overall, they should help the Dow Jones Industrials keep performing well also -- and potentially send the Dow to new record highs.

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Dan Caplinger has no position in any stocks mentioned. The Motley Fool owns shares of CSX. Try any of our Foolish newsletter services free for 30 days. 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.

A Financial Plan on an Index Card

Keeping it simple.

Aug 7, 2015 at 11:26AM

Two years ago, University of Chicago professor Harold Pollack wrote his entire financial plan on an index card.

It blew up. People loved the idea. Financial advice is often intentionally complicated. Obscurity lets advisors charge higher fees. But the most important parts are painfully simple. Here's how Pollack put it:

The card came out of chat I had regarding what I view as the financial industry's basic dilemma: The best investment advice fits on an index card. A commenter asked for the actual index card. Although I was originally speaking in metaphor, I grabbed a pen and one of my daughter's note cards, scribbled this out in maybe three minutes, snapped a picture with my iPhone, and the rest was history.

More advisors and investors caught onto the idea and started writing their own financial plans on a single index card.

I love the exercise, because it makes you think about what's important and forces you to be succinct.

So, here's my index-card financial plan:


Everything else is details. 

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