By: Todd Wheatley
(c) IQ-2k   01-21-16

Once again I will reiterate that "buy & hold" is an outmoded concept that died in the year 2008. More importantly, however, I have been advocating that small investors need to be educated on market principles and do the homework that was once left to stock brokers. Macro economics being first on the list.

Currently the U.S.economy is on a solid footing. Accumulated wealth and money already in the system should keep the vast majority of the workforce at full employment even if job growth slows in the coming months. Housing and construction will remain strong as well as the service sector. Although recent reports indicate a rise in the U.S. government budget deficit. Finally it should be noted that the economy generally does well during a presidental election year. So describing the economy as rosy would be a strech, but for the most part things are just fine.

Therefore given the recent stock market correction along with falling OIL prices a rare buying opportunity has opened up for SHORT-TERM CAPITAL GAIN in transportation and airline stocks. Reduced oil prices will bring higher profits in those sectors while giving consumers more disposable cash. It seems like a winning recipe for making money!

WHAT ABOUT THE DOWNSIDE ... China could implode (see my article on an economic apocalypse). If that's the case money won't matter. Alternatively some terror plot could draw the U.S. into a war (note stock addage: "sell the drums & buy the cannons") thus sending the markets tumbling. Also there's an increasing possibility that a rough hurricane season could take out a city or two - if that's the case buy Lowes or Home Depot unless one of the towns happens to be Washington D.C. ; Finally an oil price crash could hit the energy sector so hard that it ripples into the banking sector ... but y'all already knew all of this because you have been doing your homework :-)

I have taken a very quick look at the the following stocks and post them only as a starting point for research.

Hub Group __ (HUBG) ___$ 28.55
(** buy **)
UPS _______ (UPS) _____$ 89.07
FedEx _____ (FDX) _____$ 123.56
(P/E too high)

American Airlines __ (AAL) __$ 39.79
(** buy **)
Delta Airlines ______(DAL) _ $ 46.54
(price maybe too high following substaintial gains)
Southwest Airlines __ (LUV)_ $ 39.50
(P/E too high)

I would stay away from railroad stocks since their revenues will likely go as south as the falling oil prices especially given the extraordinary amount of oil shipped by rail in the past few years.

Union Pacific __ (UNP) __$ 71.08
(PUT)

The real savvy investors might execute a CALL OPTION for these stocks as a short-term play and PUTs on the railroads. At any rate knowledge is power and in this case ..... MONEY.


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