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UDS
Group Touts Company on WallSt.net |
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| Universal
Delivery Solutions Inc. (UDSG.PK)
appears to be getting more and more attention from Wall Street every day,
as the story behind the stock unfolds. This time around, CEO Ryan Coblin
was able to discuss the ins and outs of the investment opportunity on the
web-based market radio channel WallSt.net.
The
interview examines recent events, strategic initiatives, and perhaps most
importantly, details upcoming milestones investors may want to take special
notice of.
The
interview will be available for a few days at the site - just
click here and look for the media player near the middle/right of the
page. At a manageable 11 minutes in length, we encourage interested investors
and current owners to listen in. We uncovered a few items that were not
publicly available until the interview was released.
WallSt.net
also allows users to post feedback and comment about its interviewed companies,
including UDSG.
For
more information regarding Universal Delivery Solutions as an investment
opportunity, be sure to review the entire research report in a printable
PDF format by clicking the appropriate link below:
UDS
Group Inc.
Or,
to discuss UDS, contact:
The
Micro Cap Press
15233
Ventura Blvd.
Suite
#310
Sherman
Oaks, CA 91403
http://www.microcappress.com
1-800-277-9081 |
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Economic
Reality 101: What's Really 'Good' For Stocks? |
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 You
don't have to look very hard to find the latest batch of economic data.
Just turn on the TV or open a financial periodical - it's there, along
with a bevy of experts telling you what it all means to you and your stock
portfolio. On the surface these guys can all seem quite logical. Low unemployment
is good, we all want a strong GDP number, and inflation should be capped,
right? Well, maybe...
Has anybody
ever actually gone back and validated the scenarios supposed to be helpful
or harmful to economic growth? More specifically, has the impact
on the stock market been verified? Surprisingly, the answer is usually
no.
The Micro Cap
Press research staff - intentionally skeptical - has selected a
few of the more popular economic indications to use as test subjects, looking
for an actual correlation with the equity market. The results may surprise
you...investors may be worrying too much about the latest round of economic
data.
We've broken
down our research so far (there are many more data sets to study) into
two groups....the economic data that seems to impact the market, and the
data that didn't show us any particular correlation to the market.
Unemployment:
A lot of investors may be surprised to hear we observed unemployment, of
all things, to be a fairly good tool in spotting a strong or weak market.
However, there's a twist.
The majority
opinion is simply that lower unemployment figures signal a strong economy,
and stocks thrive as a result. The idea has merit, but is a little incomplete.
Our study shows there is no 'perfect' unemployment number (or even range),
but rather, the direction of the trend is the key. Let's walk through an
example.
Would you say
an unemployment rate of 7.5% is stifling for stocks? In early 1981 it was,
but unemployment was on its way up to 10.8%. Stocks fell (sharply) through
all of 1981 and the first half of 1982. When unemployment was 7.5% in late
1984, the market was about to start a huge bull run....aided by the way
unemployment was dropping like a rock. It reached 5.0% by early 1989. The
market nearly doubled in value during that time. By the way, unemployment
hit a multi-decade low in early 2000, right when the bear market started.
The lesson to
be learned is to not define a 'safe' or 'right 'unemployment number or
range. The challenge is, most media commentators don't even do this.
Inflation:
In some regards, inflation is like the unemployment data in that the direction
of the trend can have more impact than the number itself. Other times,
our research shows the figure is indeed too low or too high. For this reason,
we'll put it in the 'Sort Of' category.
In general,
the market can't move higher (not very well, anyway) when inflation
is greater than 4% and also rising. As for how the market responded to
inflation when it was above 4.0% yet falling, we found no statistical correlation
to equity prices.
What about inflation
under 4%? We observed inflationary stability at any level to be more advantageous
for stocks than a trend or direction. But, under 4%, we found no market
correlation with inflation trends at all. However, we did see the market
perform at least respectably most of the time inflation was under 4%.
It's worth mentioning
how inflation levels at zero, or near zero, weren't necessarily
a positive environment either. We assume they had nowhere to go but up,
and when they did, investors got spooked.
Federal Funds
Rate: Since the Federal Reserve's primary tool to fight inflation is
the Fed Funds rate, it's reasonable to think there may be some sort of
cause-effect relationship evident between it and the market. In fact, we
found the Fed Funds rate to mostly mirror inflation rates. Thus, we do
believe it may provide at least some guidance for investors.
However, the
chart also shows us two unique downsides to keying in on interest rates....1)
interest rates tend to lag inflation rates, and 2) interest rates aren't
as volatile as inflation rates. Surprised to hear those extreme inflation
swings are actually beneficial? It's true - a pointy top or bottom in inflation
rates was more likely to signal a top or bottom for the market. The Fed
Funds rate didn't seem to show those reversal points quite as well.
Capacity
Utilization: It wasn't perfect, but based on the limited data we had
for capacity utilization (back to 1985), the capacity trend may be of some
help for patient investors.
This data was
actually one of the few we saw to be a leading indicator, meaning
it perked up before major rallies, and tapered off before major pullbacks...giving
an investor time to take action.
For instance,
capacity utilization hit a low of 73.6% in December of 2001, and started
to move higher (much higher). The market didn't start to improve until
October of 2002, and really until March of 2003. But, wouldn't you have
loved to been a buyer in early 2002?
You could make
a decent argument that the capacity utilization number also foretold the
2000-2002 bear market. It was, after all, hitting multi-year lows by late
2000. Our only problem with the notion is simply that capacity utilization
was inching lower throughout the late 90's. Still though, we can see both
sides of the argument.
Those same investors
might counter that the 1989-through-1991 decline in capacity utilization
coincided with at least a weak market...a market not nearly as strong as
we usually saw when capacity utilization is increasing. And, we can't deny
or argue their point.
That said, we
had to put capacity utilization in the 'Sort Of Worked' category primarily
because there's only limited historical data. We do believe it's worth
monitoring though.
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What
Didn't Work (as far as we could tell) |
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 Gross
Domestic Product (GDP): Did you realize by the time investors hear
about quarterly GDP results, we're actually closer to the end of the following
quarter? By the time we hear it, the underlying data always seems to be
built-in to stock valuations at the time. So no, we don't view the GDP
number as particularly helpful to investors - at least in terms of timing.
But what about
a 'bigger picture' use for a secular (loooong-term) trend? Well,
the number may not be all that helpful in these cases either.
In Q4 of 1999,
the GDP rang in at 7.3...right before the bear market started. On the flipside,
Q3 2003's reading of 7.5 came in the early stages of a bull market. In
Q2 of 1983 we saw a GDP of 9.3, but the market sank 8.8% over the next
twelve months. The GDP's huge move to 16.7 in Q2 of 1978 came in front
of a 7.7% bull run over the following year.
In other words,
we found no meaningful statistical correlation between GDP and market performance.
Michigan
Sentiment: We'd almost be willing to say the Michigan Sentiment Index
could be better used as a contrarian indicator, which just means an investor
should do the opposite of what the obvious logic would suggest. In other
words, positive opinions (relatively) are bearish, and negative opinions
(again, relatively) are bullish. We've seen such successful contrarian
uses from the VIX, consumer confidence, AAII polls, and others before.
 So
how would the Michigan Sentiment Index fare in this light?
In May of 1980,
the sentiment reading hit a multi-year low of 51.0. Twelve months later,
the market was 19.2% higher. In October of 1990, the Michigan Sentiment
Index scored a multi-year low of 63.00. A year afterwards, the S&P
500 had rallied 29.0%.
And what about
higher readings? The all-time high reading of 112 was hit in January of
2000. Twelve months later, the market had fallen by 2.0%, and was headed
for much worse. On the other hand, the reading of 101.0 in March of 1984
came right before a 13.5% rally over the next year. February of 1998's
peak of 110.0 was followed by an 18% rally for the S&P 500 over the
next twelve months (and this included a major correction).
Needless to
say, we found little to no reliable help for investors using the Michigan
Sentiment data.
No, we haven't
lost our micro cap focus. In fact, we plan on resuming our coverage of
the small and micro cap markets later this week. We simply figured with
all the economic prognosticating going on right now, it was worth devoting
a little time just to explain how - sometimes - the media can make something
out of nothing. This isn't to say the data we examined above is meaningless
or superficial. We're simply saying one piece of data interpreted in a
vacuum is rarely of any real help for investors. In fact, it can be misleading
in many cases.
Perhaps more
importantly, we say all of this to encourage investors to take the news
with a grain of salt. Sometimes the best investments are the ones most
people would tell you to avoid, and the best time to own them is when most
would say is the worst. Our ongoing research shows that great companies
frequently make for top-performing stocks regardless of the economic environment.
And often, the environment isn't even what the media describes it as.
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Updated: 9:18 am PST (17:18 GMT), January 5, 2009
