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

CompaniesTickerPrice July 27Price ChangePercent Change
Alico Inc.ALCO47.2-7.85-14.26%
Andersons Inc.ANDE42.4-4.15-8.92%
Burlington Northern Santa Fe Corp.BNI82.74-7.62-8.43%
Berkshire Hathaway Inc. Cl BBRKB3,615.00-27.5-0.75%
Bassett Furniture Industries Inc.BSET13.38-0.66-4.70%
Peabody Energy Corp.BTU41.08-5.13-11.10%
Cabela's Inc.CAB20.37-1.16-5.39%
ConAgra Foods Inc.CAG25.74-0.83-3.12%
Cato Corp. Cl ACTR21.19-2.67-11.19%
Citizens Communications Co. Series BCZN14.36-0.8-5.28%
Deere & Co.DE118.94-10.13-7.85%
Dean Foods Co.DF29.51-2.15-6.79%
DIRECTV Group Inc.DTV22.23-1.87-7.76%
Family Dollar Stores Inc.FDO30.24-4.28-12.40%
Fleetwood Enterprises Inc.FLE9.38-1.32-12.34%
FairPoint Communications Inc.FRP15.82-1.25-7.32%
Gaylord Entertainment Co.GET49.56-5.1-9.33%
Hormel Foods Corp.HRL35-1.4-3.85%
International Speedway Corp. Cl AISCA48.16-1.97-3.93%
Lee Enterprises Inc.LEE18.22-0.32-1.73%
Mohawk Industries Inc.MHK92.57-4.85-4.98%
Monsanto Co.MON63.45-5.59-8.10%
Mine Safety Appliances Co.MSA41.14-3.81-8.48%
Southwest Bancorp Inc.OKSB20.22-1.04-4.89%
Plum Creek Timber Co. Inc. REITPCL38.55-3.87-9.12%
Penn Virginia Corp.PVA38-3.29-7.97%
Ralcorp Holdings Inc.RAH51.54-2.17-4.04%
Regions Financial Corp.RF30.28-2.34-7.17%
Sturm Ruger & Co.RGR19.342.6816.09%
Smithfield Foods Inc.SFD31.34-3.28-9.47%
Skywest Inc.SKYW22.08-1.39-5.92%
Southern Co.SO33.79-0.47-1.37%
Stage Stores Inc.SSI18.05-2.66-12.84%
Tractor Supply Co.TSCO46.23-3.29-6.64%
Tyson Foods Inc. Cl ATSN21.41-2.26-9.55%
UST Inc.UST54.010.180.33%
Waddell & Reed Financial Inc.WDR25.25-2.34-8.48%
Walter Industries Inc.WLT25.6-4.73-15.60%
Wal-Mart Stores Inc.WMT45.94-2.12-4.41%
Cimarex Energy Co.XEC38.05-3.15-7.65%
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