What does Providence have to do with your portfolio?

In 1877 a young farmer from Sterling, Connecticut wrote a piece for the Providence Sunday Dispatch regarding the transportation systems between New York and Providence, CT.  This piece proved to be the seed for many more writings and articles by this young farmer turned business reporter, blossoming into a successful career that would establish the Wall Street Journal and the Dow Jones Industrial and Transports Averages.  Charles Dow’s fascination with the railroads, the primary transportation mode of the day, led to his obsession with American business. 

Today, when most people speak colloquially of the Market, they are more times than not referring to the Dow Jones Industrial Average.  While he believed that this was an important indicator of the health of the stock market, he always relied upon his original interest in Transports to confirm what the DJIA was telling him.  He never went into why this was so, but observed that they did confirm each other when their signals proved correct.  Again though, with the Internet, Direct mailing, soft-products as opposed to hard-goods, does the study of the Transports matter anymore?

It would be wise to remember that the Transportation Average represent 6 different industries: airlines, air freight, railroads, rail equipment, marine transport and trucking.  Most companies, even in the age of the iPad, still require these mediums to deliver those iPads to those of us who eagerly await their arrival.  Business still relies upon transportation and monitors the fortunes of transportation companies; we would be wise to do the same.



Latest News

Mark Hulbert of Marketwatch: The Transports have been the stronger of the two benchmarks, and it is widely considered to be a leading economic indicator.  Read the article HERE.

There has been renewed interest in the Dow Theory since Jack Schannep presented his research to the Market Technicians Association that showed Dow Theory produced an excess return of 1.5% per year (from 1953 thru 2011) versus a buy and hold strategy.  His presentation attracted a whole new generation of Dow Theory enthusiasts.   Read the article HERE.

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