The Wall Street Journal Turns Bullish

Tuesday, October 12, 2010

Yesterday’s piece about the shortage of business news in The Wall Street Journal’s front (“A”) section recently (“No News Is Good News for the US Stock Market” – October 11) changed radically today. The paper is filled with business news – and virtually all of it is bullish. Even the “but” statements have reversed (i.e., any negative observation was quickly followed by a “but” counterpoint).

This development is a good example of the press changing direction. Moreover, the news is important for investors, starting with the lead article, “Farm Belt Bounces Back” (by Scott Kilman, October 12, page A-1). In this well organized, well written piece, agriculture’s many positive developments are explained and put into proper context. As investors, we gain knowledge, and some of it may come as a surprise. The information has been in the open but was sometimes hidden by macro angst and an emphasis on the negative.

If you are worried, uncertain or simply lukewarm about the US economy and/or stock market, this paper is a must read. Put aside any thoughts and feelings first, then read today’s edition (yes, you may skip the political and opinion pages). Look at the number of positive developments besides agriculture. Even Wall Street’s 4% pay increase (2009 to 2010 estimated) contains no cause for concern – it simply matches the increase in revenue.

A good example of US stock investing

Now focus on that lead article, thinking about what agriculture’s strong showing can do for the US economy and, therefore, US stocks. The stock example many investors think of when they hear “farm” is Deere (DE). Here’s the stock’s long-term record:

Building on a strong fundamental base and earnings growth, the stock is now back to its long-term trend line (AKA “normal”).

Food for thought: Deere is a cyclical stock, subjected to the economy’s and the farm belt’s volatility. Yet it represents a good example of why today’s familiar phrases are questionable:

  • “Buy and hold investing no longer works”
  • “The lost decade” (implying that investing in stocks over the past ten years was useless)
  • “Growth will be slow, taking many years to recover”
  • “US stocks are, and will remain, a poor investment”

So… Hopefully, today’s WSJ is the sign that the search for negative news is over. With balanced reporting, the continuing improvements in many economic areas, industries and companies should become better known. With facts and understanding, investor anxiety can dissipate, leading to better long-term investing results.

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October 2010