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Morning Commentary

Keep on Truckin

By Charles Payne, CEO & Principal Analyst
1/25/2013 7:47 AM
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The ability of women to participate in combat is a wonderful accomplishment. I come from a long line of women that were fighters against amazing odds, they got the job done. I'm more concerned with the gutless men and women in Washington that will not do the right thing no matter how dire the final outcome is from each day wasted. Sure, we are settling into a "feel good" era now where backers of the President toss out superlatives about a job market that saw 8 million human beings flee, and GOP lawmakers keep caving on things they used to fight tooth and nail over.

Yes, bring on the women into combat, and while we're at it, bring on people not afraid to fight on principle and lose.

Mediocrity is the benchmark for which we measure ourselves, making the slightest gain breath-taking and even modest improvement monumental. I think individuals sitting on the fence for a long time have finally succumbed to this reality as well. They are coming back to the market as it's the only game in town (along with hard assets) knowing they have to offset higher taxes and a future dollar that will be flaccid and virtually worthless. There is no choice. Those that think this is akin to taking the red pill are mistaken - it's fighting the fight the only way you can for the moment.

Unless there is a serious gut check in Washington, and a wave of honesty, this make-believe world of "great" 2% GDP growth and "amazing" 150,000 monthly job gains will fuel higher stock market and housing prices. I'm not asking anyone to believe ... for four years I've been saying you have to prepare your future the best way possible. It's one thing to know the future is less bright because of our mountain of debt and policies that are gutting our competitiveness. It's another to simply fret about it without action.

Transportation Driving Market Making Rally "Real"

I featured Swift (SWFT) On December 10, 2012, on Fox Business at $10.00 a share, and yesterday the stock popped 24%. I liked the company in part because of management (told the story of Jerry Moyes as a young lad that loved trucks so much he told people he would own 100 one day- it's 14,433 now, but who's counting) and also the macro environment and valuation.

I've begun telling the individual story of stocks in an effort to make people feel more at ease. There is a distinct difference between the stock and Wall Street and the individual companies that are publicly traded. The latter represents people, dreams, ambitions, and for investors potential opportunities.

Being publicly traded can separate a stock from the reality of the company just as the stock market doesn't always have to reflect the broad economy. A great company can have an overvalued stock, and a poor company can have an undervalued stock. For me, investing is all about understanding value and finding names based largely on management's ability to eventually get its underlying shares to reflect top value.

On that note, JB Hunt (JBHT), which is in our model portfolio, was also up huge yesterday after posting record revenue, net income and earnings for the fourth quarter and full year. The strength doesn't mean the U.S. economy is roaring; it only means that values were too low, and now the coast is clear enough for a rebound.

But it's not just trucks, it's rails and it's airlines. Consequently, the Dow Jones Transportation Average has soared to an all-time high. For old school investors and others, this is the best news for the broad market rally. According to the Dow Theory, broad rallies must be led by transportation which represents the broader economy.

Of course, the economy and market are more complicated than 110 years ago and more intertwined—this is a true global economy. Moreover, we are a service economy driven by consumer spending. Yet, obviously materials must be moved around as well as people, and the more that happens, the firmer the fundamentals behind a rally become. Cases in point are this week's earnings results from the rails.

While we have been in rails for years (even before Buffett) and have exposure to truckers, I've been reluctant to do anything with airlines because more than 100 of them have gone out of business since 1980, and I hate airline travel (first class isn't what it used to be). But their tacky shakedown of passengers appears to be working. Nothing has driven the move in the Dow Transportation Index like airline stocks:

The bottom line is a lot of people are coming back to the market, so that means some kind of mini correction as an attempt to shake out the weak sisters, but beneath the surface, all pieces are in place for a huge 2013.

Yes, our country is running in place and setting itself up for disaster, but this is America, and it will take a while before the house of cards tumbles. In the meantime, women in combat are like women in the workforce. I think it's wonderful and makes the nation stronger.
Definitely B. Stated with the caveat that this current economic situation scares me witless. Who is running the show? Beats me.

Connie Helgason on 1/25/2013 8:39:16 AM
Letter B on poll question

Rod on 1/25/2013 10:12:05 AM
I appreciate your common sense in all things but I just marvel when I read Paul Krugman OP in the NYT. What a disconnect from reality! If this mainstream, we are all in a world of hurt!

Rick W on 1/25/2013 10:34:57 AM
Like most people with 401k's or pension funds I have always been in the market. I suspect that those who say they are not in the market fail to consider their 401k's and pensions. We have also been investors through the thick and thin of the market and its woes. Its almost like the lottery, you cannot win if you do not play and the odds in the market are alot better.

Mark Swenson on 1/25/2013 11:09:01 AM
My answer to your question of the day is "none of the above". Thru variable annuities, I was totally out of the market, in cash, prior to the 2008 debacle. I went "all in" in May of 2009,missing the bottom but not by much. I've been "all in" since. I'm a big believer in "don't fight the Fed".

BTW, I always look forward to seeing you on Fox, and I truly enjoy your series on art. Very perceptive. You are one smart man! Also a fellow Air Force brother.

Spencer Arnold
Captain, USAF (fmr)
EB-58 EWO Vietnam

Spencer Arnold on 1/25/2013 11:12:45 AM
Definitely A for now. Mostly I believe that there is "funds inflow" (money out of fixed income into equities) phenomenon that is pushing the market higher. While the economy is anemic it is getting better not worse for now which is also helping equities. And lastly the fed's accommodative policies with low interest rates. Still wondering how Big Ben is going to withdraw all the liquidity out of the system without any impact. But even that is down the road.

Michelle J on 1/25/2013 11:26:36 AM
Answer B. I have and continue to "get in" but I watch movements much more closely than ever before. Keep up the good work Charles

RS on 1/25/2013 11:57:53 AM
Question of the Day: Somewhere between B & C. Not much in the equity mkt right now, and am flush with cash. Picked up some floating rate notes really cheap last year and will hold them as interest rates will slowly rachet up some soon.
Yes, the Fed Reserve is goosing this market, but I believe the Fed is playing craps. Eventually, a seven will come up and people will leave a lot of money on the table, kicking themselves.
Keep up the good fight for people like us who work hard every day.

David Beck on 1/25/2013 12:07:00 PM
Current valuations of blue chip stocks are good and so are dividends. If you buy a stock with dividends of 3 to 6% that will help provide support if there is a general market downturn. Diversify and buy in gradually.

Bill Richards on 1/25/2013 12:25:37 PM
I think we are, and have been for the last eight years or so, dancing on thin ice. My gamble to be heavy in tangibles; precious metals, real estate, guns, ammo and the like, have thus far not panned out all that well. But I believe that we are one step from the edge of the REAL financial cliff, and it is 11:30, almost midnight, and we are walking in the dark.

Ed Hanley on 1/25/2013 3:13:23 PM
D. The market did well, mostly because of Fed bribing, but is still "fractured" and mostly a head-scratcher; therefore, equities look like they are set for a big fall. Get out, temporarily.

George Stelzenmuller on 1/25/2013 3:35:26 PM
C-skeptic-"irrational exuberance"

Rich on 1/25/2013 7:26:37 PM

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