Yow! Dow Drops — But Yonder 40 Drops More in Hard Week for Markets

Yonder 40The Dow had the worst week in five years. The Yonder had its worst week since its inception (four weeks ago). All indexes are down, but the Yonder 40 is down the most.

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Yonder 40It wasn’t a good week for any stock index. The Dow dropped over 500 points in the last two days, as investors were worried about credit risks. (That’s what the financial press tells us. Oil prices were up, too. And maybe the market was just reacting to sunspots or the ring around the moon. Who really knows?)

For the record, the Yonder 40 fell 6.7 percent this week, dropping the 40 stock index of the rural economy below its beginning level of July 1. The Dow was down 4.2 percent in the week. The NASDAQ was down 4.7 percent and the Standard and Poor’s 500 index was off 4.9 percent. All the indexes are below their levels of July 1. (See full results below.)

And all of the Yonder stocks were down for the week — except for two. Gunmaker Sturm Luger was up strongly again this week. Chaw-maker UST was up slightly. It was a good five days for guns and smokeless tobacco.

We can hope for something better next week. In the meantime, an interesting discussion has broken out about the meaning of the Yonder 40. Last week, the Rural Populist asked what the 40 really meant.

“When Wal-Mart is doing well, businesses up and down main street in rural communities are being driven out of business," RP wrote. “And when Wal-Mart is doing well money is being sucked out of rural communities, destined for the pockets of rich urbanites. When Smithfield is doing well, farmers aren't receiving a fair price for their livestock. And when Smithfield is doing well, family livestock producers are being put our of business. And so it goes for a number of the stocks in the Yonder 40. So, what does the Yonder 40 really tell us?"

One of the founders of the Yonder 40, former S&P managing director Jim Branscome, responded to the Populist:

“None of us may like it and would love a stock index that reflects the hard work of the small farmer and throws in the sweet smell of alfalfa drying in the windrow, but the reality of what really drives the rural American economy is Wal-Mart and the 39 other companies in the Yonder 40.

“We did take the Waltons down a few notches when we equal-weighted their $115 billion colossus in the Yonder 40 with the $4 billion Dean Foods that peddles butter and half and half, all made from real American milk. Or, at least, none of it from cows in China.

“We sorted through about 3000 stocks before we selected the sainted 40. It would have been nice had we come across investable public companies that represent farmer cooperatives, rural electric co-ops, or worker-owned coal mines and sawmills. There ain't none. No fan of the Daily Yonder may be comfortable with it, but the reality is that Thomas Jefferson's vision of America as a nation of farmers and toilers in the soil is as dead as our third president. Or at least that's what you find when you try to construct an index using SEC registered and stock exchange listed companies for rural America.

“Had we tried somehow to value the private companies that deal with rural America, impossible as that probably is, we would also have had to list Cargill and Koch Industries and the Chicago Board of Trade as well as the little bitty businesses that dot our small towns.

“Those of us who think about indices and derivatives and also love rural America would love to find some way so we could all go short the Farm Bill and all the presidential candidates who haven't even bothered for more than a few minutes to construct a rural policy platform. More work to be done!

“We're always open to suggestions of public companies that we may have overlooked. Given how fast mergers and acquisitions are taking place these days, we are going to need some good replacement candidates!"

Anyone else want to pipe up?

THE YONDER 40 JULY 22-27


Companies Ticker Price July 27 Price Change Percent Change
Alico Inc. ALCO 47.2 -7.85 -14.26%
Andersons Inc. ANDE 42.4 -4.15 -8.92%
Burlington Northern Santa Fe Corp. BNI 82.74 -7.62 -8.43%
Berkshire Hathaway Inc. Cl B BRKB 3,615.00 -27.5 -0.75%
Bassett Furniture Industries Inc. BSET 13.38 -0.66 -4.70%
Peabody Energy Corp. BTU 41.08 -5.13 -11.10%
Cabela's Inc. CAB 20.37 -1.16 -5.39%
ConAgra Foods Inc. CAG 25.74 -0.83 -3.12%
Cato Corp. Cl A CTR 21.19 -2.67 -11.19%
Citizens Communications Co. Series B CZN 14.36 -0.8 -5.28%
Deere & Co. DE 118.94 -10.13 -7.85%
Dean Foods Co. DF 29.51 -2.15 -6.79%
DIRECTV Group Inc. DTV 22.23 -1.87 -7.76%
Family Dollar Stores Inc. FDO 30.24 -4.28 -12.40%
Fleetwood Enterprises Inc. FLE 9.38 -1.32 -12.34%
FairPoint Communications Inc. FRP 15.82 -1.25 -7.32%
Gaylord Entertainment Co. GET 49.56 -5.1 -9.33%
Hormel Foods Corp. HRL 35 -1.4 -3.85%
International Speedway Corp. Cl A ISCA 48.16 -1.97 -3.93%
Lee Enterprises Inc. LEE 18.22 -0.32 -1.73%
Mohawk Industries Inc. MHK 92.57 -4.85 -4.98%
Monsanto Co. MON 63.45 -5.59 -8.10%
Mine Safety Appliances Co. MSA 41.14 -3.81 -8.48%
Southwest Bancorp Inc. OKSB 20.22 -1.04 -4.89%
Plum Creek Timber Co. Inc. REIT PCL 38.55 -3.87 -9.12%
Penn Virginia Corp. PVA 38 -3.29 -7.97%
Ralcorp Holdings Inc. RAH 51.54 -2.17 -4.04%
Regions Financial Corp. RF 30.28 -2.34 -7.17%
Sturm Ruger & Co. RGR 19.34 2.68 16.09%
Smithfield Foods Inc. SFD 31.34 -3.28 -9.47%
Skywest Inc. SKYW 22.08 -1.39 -5.92%
Southern Co. SO 33.79 -0.47 -1.37%
Stage Stores Inc. SSI 18.05 -2.66 -12.84%
Tractor Supply Co. TSCO 46.23 -3.29 -6.64%
Tyson Foods Inc. Cl A TSN 21.41 -2.26 -9.55%
UST Inc. UST 54.01 0.18 0.33%
Waddell & Reed Financial Inc. WDR 25.25 -2.34 -8.48%
Walter Industries Inc. WLT 25.6 -4.73 -15.60%
Wal-Mart Stores Inc. WMT 45.94 -2.12 -4.41%
Cimarex Energy Co. XEC 38.05 -3.15 -7.65%

 

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