The Yonder 40 Stock Index Doesn’t Match S&P’s Gains
The Yonder 40, the stock index of Rural America, rose this week, but lagged the other major indices. The Yonder 40 — 40 publicly traded stocks meant to reflect the rural economy — was up slightly less than a percent for what was a very good week for the overall stock market. The Dow Industrials rose 2.2 percent and the Standard & Poor 500 was up 1.47 percent.
The largest gainers in the DY 40 were Fleetwood Enterprises, a maker of mobile homes, and Smithfield Foods, a hog raiser and meat producer.
The Yonder 40 is up 3.35 percent since July 1 of this year, behind the other major indices.
The Yonder 40 was put together by two Wall Street veterans: Jim Branscome, a former managing director of Standard & Poor’s; and John Borden, a former investor relations manager for JP Morgan Chase. Borden and Branscome (both of whom grew up in southern Virginia) concocted the Yonder 40 with the hope that it would help us understand the rural economy. Branscome said that, for this reason, the Yonder 40 is “the first index created in the last 25 years not designed to get its creators a condo overlooking Central Park."
The Rural Populist asks good questions about the Yonder 40 in a comment:
This is an interesting idea — an economic indicator of the relative health of rural America. But what will we really know when the Yonder 40 soars, and when the Yonder 40 falls? With stocks like Wal-Mart, Tyson, Smithfield, Monsanto, and ConAgra included in the index, the economic health of rural America might in fact be measured as an inverse of the Yonder 40.
When Wal-Mart is doing well, businesses up and down main street in rural communities are being driven out of business. 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?
The answer is, we don’t know. Borden and Bransome have promised to help the DY figure it out. But we need more help from the Rural Populist and others. We’ll know more as time passes and trends develop.