I’m just curious to know if anyone on the forum is using the current “down-tick” in the market as a good opportunity to buy good RR stocks at bargain prices? And no - I’m not a speculator (every stock I own is either in a mutual fund or my 401k - most now in the toilet like everybody else’s).
Sorry - I just love the word “down-tick” and I had to use it even though it’s certainly an understatement! [:D]
I haven’t yet, but I will be over the next few weeks. That will give me enough time to assess buying opportunites. I don’t speculate…I study the annual reports, and if the railroad is a sound profitable operation and the future looks reasonably promising then I buy in.
I’ve got an ESOP payout coming, and if it’s soon enough, I’ll add a few more shares and put the balance into mutual funds like my broker wants me to.
Just for fun, find a chart that allows you to graph the price of one or more of the various RR stocks vs. the indexes - such as the Dow Jones 30 Industrials, and/ or the Standard & Poor’s 500 - and for varying time periods, such as 1 day to 10 years and various intervals in between. MSNBC and YAHOO both have that function, and probably many others as well.
Not as a recommendation - but merely as an example - check out BNSF (symbol BNI) and Canadian National (symbol CNI) and see how over the past year they generally did better, then over the last 3 months did worse in the middle but held their ground better at the end, and then over the last 10 days how everything went down, but BNSF less so than the others.
Me ? Yeah, I’ll probably buy some more, sometime soon. Following Warren Buffett’s policy, I don’t buy what I don’t understand. Right now I’ll put my railroad and intermodal stocks’ track (pun !) record since 1999 up against any mutual fund, any Wall Street stock picker, any brokerage house or advisor, any of 'em, esp. those clowns & crooks that mismanaged my investments before then. It’s not spectacular, but my gains are still there - are theirs ?
At my last visit with my broker, he didn’y have much to say when I asked him, “how did the RR stock you didn’t want me to buy do?”
With fuel prices lower, at least for now, it may be a good idea to look into them. There will be a bottom somewhere in all of this, then comes the rise, unless Uncle Sam screws it up.
At 79 or 80 BNSF is right back in the range where Berkshire previously was the big purchaser. Assuming all their resources didn’t get tied up in the Goldman Sachs deal, one wonders if they will be again.
Good one ! Thank you.
Paul
I too bought into BNI and first started puchasing BN before it was BNSF and will continue to buy BNI. It has made more for me than most other stocks I have purchased and the future continues to look bright.
Another stock worth looking at is GE but I think before buying I will wait a couple of weeks on that one.
And I tell my broker what to buy he knows better than even to suggest a stock to me any longer
Al in Stockton
GE may look better once Immelt is out as CEO. Their locomotive business may be doing alright but he’s made some bad decisions and he’s got lawsuits coming at him. He’s gotta go.
I’m buyin’-into Kimberly-Clark Corp. - they produce Depends diapers and I figure those things are in big demand right now.
BNSF has had a plan in place to buy back some of its own stock so thet are probably doing so now. Any other companies with a similar plan no doubt are doing it now.
I’ll bet if someone knows the name of a crying towel producer right about now they stand to make millions in its stock.
Al - in - Stockton
I have been tempted on certain stocks but we have taken a strong hold position and are all cash and everything liquid. Not one penny is in the market right now and it will be that way for a very long time.
Our bank can disappear along with wall street and it wont matter as long as our basic bills are paid each month.
Show me a railroad (Or any company) that is debt free and can run on cash every day without excessive debt and does not need to borrow or sell anything to do a day’s work and then maybe…
When the bears are down at the riverbank feasting on the fish tooth and claw, that is not the time for soft fishermen humans to be putting a baited hook into the same water.
Mutual funds??? my neighbor just lost all his nest egg on those babies, remember, mutual funds ARE the stock market.
They’re not cheap yet. When the P-E ratio is down around 6, then they’ll be cheap. Historically in big market slumps such as the 1930s and the early 1980s the P-E ratio get to around 6 before the market turned around.
If you look at the price charts in Google Finance for the Class I railroad stocks, and click on the “max” label to see the long-term, it shows that there’s a heck of lot of growth in the stock price in the last 3-4 years. Did the value of the railroads suddenly double in 3-4 years? That’s what the stock price is still saying, even after the losses of this week.
RWM
When your net revenue goes from about 1/2 B to 2B in the same time period, I’d say yes!
(Might be a good time to look at oil stocks, tho’.)
Like a few folks (thanks Paul) I just told my broker to buy RR stocks about 15 years ago. He thought I was just a fan that just wanted to blow some money on a non-sexy stock. Now his sexy stock (Enron) is nowhere and my NS is very comfortably taking care of itself despite the down tick (good term). I also am looking at adding some more such common stock to my self directed IRA. BNI looks interesting and I think that KCS will deserve a look. But I am less interested in what the stocks look like now as to what I feel they will do in the coming recovery which I believe will be sooner than many people think.
As the great railroad investor himself (like him or hate him he knew a good investment when he saw one) J.P. Morgan would do BUY ON BAD NEWS AND HOLD FOR THE LONG HAUL. This rather old fashioned and quaint idea seems to work best for those keep that idea to their long term profit.
My 2 cents
PL
The large US railroads have a P/E of 13 to 15 as of yesterday; the Canadians are a little less. That isn’t notably cheap, and if you take a look at most of their charts all that has happened recently is that they retreated to the levels of a year ago.
Especially considering their forseeable capital needs in the next few years, I’d be very cautious about the industry until things settle down a whole lot more.
Hey !! great idea to buy stocks in RR now, Oh wait, didn’t we just go through the worst week in financial history???, what would we buy these cheap stocks with?? goats?? green bottles? shiny beads? I just checked my retirement stock portfolio, seems it has disappeared with the largest drop in history, have none of you people heard about this??? what are you using instead of money, and most importantly, how did you manage to avoid this recession/depression?? can you share your knowledge with the rest of us mooks.
Yes on the surface you are right and I have been doing some trading in my self directed IRA, but not enough to even come close to a “killin”.
Years ago when I was doing retail financial services before being “promoted” to the back office we had a part of our pitch that I am sure will sound familiar to some of us. 1. Own your house, 2. keep some money in cash up to 5 months of annual income and 3. if you own stocks and bonds buy only highest quality at the lowest price with the idea of holding for a long, long, time. Then use the dividends from the investments to go after the higher risk.
Railroads are a very good investment for the long haul (pun intended). Buy carefully with information not necessarily provided by your broker. (Most brokers don’t know or care one bit about railroad stocks). Buy into the companies that either are the main listings from the transportation index or companies that do business either for or as a part of the railroad enterprise.
As for me personally, I am still staying with what I got and am happy when Messrs. Harrison, Ward, and Moorman declare the quarterly dividends and a couple of electric utilities that use their services declare theirs.The best advise I can give right now is Watch and wait BECAUSE MARKET MATTERS ARE NOT YET RESOLVED, but I have confidence they will be get resolved. Fr practical matters: stay liquid, pay your bills, live within your means and save some cash every month.
As for market wisdom, only this, Fortune rarely favors the foolish.
PL