Connecting The Dots: Choppy Seas For Transportation Stocks

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Connecting The Dots: Choppy Seas For Transportation Stocks

Connecting the Dots: Choppy Seas For Transportation Stocks by Tony Sagami

“Red sky at night, sailor’s delight. Red sky in morning, sailor’s warning.”

—Old sailor’s adage

In the old times of sailing ships, sailors paid careful attention to the weather to see if it was safe to set sail. Investors should be watching the economic climate with the same intensity to see if it is safe to invest in transportation stocks.

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investor 1652197064It's no secret that this year has been a volatile one for the markets. The S&P 500 is down 18% year to date, while the Nasdaq Composite is off by 27% year to date. Meanwhile, the VIX, a key measure of volatility, is up 49% year to date at 24.72. However, it has spiked as Read More

And let me tell you, the economic climate for transportation stocks is quite ugly.

Red Sky Morning #1: The Bureau of Transportation Statistics (BTS) reported that the total amount of freight volumes fell on a year-over-year basis. The total volume of freight moved by all types of transport—road, rail, pipeline, inland waterways, and as air cargo—dropped by 1.1% in the month of November (most recent statistics available), compared to the same year-ago period.

Transportation Stocks

Red Sky Morning #2: The Association of American Railroads reported that freight volume on US railroads fell by 2.5% in 2015.