As I relate the good times, the bad times and the so-so times in my career, and I guess that is very dependent on the action of the stock market and my ability to call the expected direction correctly, I find almost all indices lacking in which to describe it. In many ways though, one stock seems to have it about right. That stock is FedEx (FDX), a company that essentially is a great proxy for the goods it carries, which involves both domestic and international economies.
We can worry all we want to about China, the Fiscal Cliff, the political polarization in this country, etc. There are simply not enough "etc." to cover all the questions, but this morning, I just boil it all down to FedEx - they're about as good a symbol of all those "etc.". Of course, that company has a management, labor relations, etc., but for today at least, I'm willing to accept it as my proxy for America's present and future. So with that view, let's study the barometer of what the smartest people in the world think about FedEx, and by comparison about the future of economic growth in a free country struggling to find its way. Let's look at the long-term picture.
This chart evens out all the distortions of the Tech Bubble and the massive financial fraud of 2007, and it shows the huge loss in that 2008 debacle as the world pretty much depended on Bernanke and Paulson to bail out the financial ruin that was on a path to repeat 1929-32. But with that rescue on the way, in 2009 and 2010, the economy (the world's economy) was telling us the first phase of the rescue had circumvented another Great Depression. But based on this proxy, the last two years have been a wash.
Today, FedEx's stock price is still around 25% under the peak levels reach in 2006. Sadly, it is now only trading at levels first reach in 2005. That's the bad news, so now what is FedEx telling us about the future's news? FedEx's stock is waiting, and so are we. Our Psychology Composite is now at P4, and the stock market and economy are transitioning into its next phase. There are some favorable signs that the economy is actually starting to "gear up," but so far, the stock of FedEx is still acting very docile.
I know, I know, never base your reading on just one stock, but you have to admit this one stock has pretty much described how growth investors have fared through the thick and thin of these last 20-30 years. As of now, it seems to agree with the message from our Asset Allocation Model that says to stay bullish for the long-term, but in the short-term, wait on some more definitive evidence. That last few weeks' relative strength has been promising, but it certainly has not broken out yet.
Thanks for reading.
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