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Tracking How Far They Fell: March Edition

Apr. 01, 2018 8:58 AM ETCAT, BA, CMI, DE, GD, NOC, ETN, EMR, UTX, MMM, ROK, JNJ, SPLV, VPU, OMI, HWKN16 Comments


  • In January, I began publishing articles that examined how far several large-cap industrial stocks might fall during a bear market, and I suggested some alternative investments.
  • This article will examine how those industrial stocks are tracking against the more defensive alternative investment ideas.
  • The most recent mini-correction in March, driven largely by politics and government policy, produced some interesting market moves.
  • Defense stocks continued to hold up well, but Aerospace joined Dividend Growth stocks' underperformance, and Deep Cyclicals continued to get hit hard.
  • Overall, of the 11 industrial stocks I wrote about in January and February, 9 of them underperformed my suggested alternatives. I offer my views going forward into 2018 about the prospects of both.


In mid-January, I began writing a series of articles that examined how far some popular large-cap industrial stocks might fall if we were to have a downturn within the next three years. I continued writing about stocks in the industrial sector through the month of February, eventually covering a total of 11 popular large-cap industrial stocks: Caterpillar (CAT), Boeing (BA), Cummins (CMI), Deere (DE), General Dynamics (GD), Northrop Grumman (NOC), Eaton (ETN), Emerson Electric (EMR), United Technologies (UTX), 3M (MMM), and Rockwell Automation (ROK).

While all the articles were generally bearish in nature and meant to be a warning to current investors that even the stocks of good companies could fall quite far during a bear market, I didn't stop there. In each article, I suggested alternative investment ideas for the stocks in question. With the exception of 3M, whose suggested alternative investment was Johnson & Johnson (JNJ), those alternative investments either took the form of the PowerShares S&P 500 Low-Volatility ETF (SPLV) or the Vanguard Utilities ETF (VPU), or a split between the two.

This article will examine how those alternatives are performing so far, and I'll also relay some of my observations about the market, as well as some general takeaways or investing lessons we might learn from tracking these results. I am a big proponent of reviewing and tracking performance because we can learn so much from it. I know for certain that I've learned a lot from carefully and painstakingly analyzing both my mistakes and my winners over the years.

Overall, the alternative investment ideas are performing extremely well so far against the original industrial stocks. 9 out of the 11 alternatives are outperforming the target stocks, and most of them are significantly outperforming. Now let's take a closer look at each individual investment, and I'll also comment on some

ChartCAT Total Return Price data by YCharts
ChartCMI Total Return Price data by YCharts

ChartNOC Total Return Price data by YCharts
ChartGD Total Return Price data by YCharts

ChartSPY data by YCharts

ChartSPLV Total Return Price data by YCharts

ChartBA Total Return Price data by YCharts

ChartMMM Total Return Price data by YCharts
ChartETN Total Return Price data by YCharts
ChartROK Total Return Price data by YCharts
ChartUTX Total Return Price data by YCharts

ChartEMR Total Return Price data by YCharts

ChartDE Total Return Price data by YCharts

ChartOMI Total Return Price data by YCharts

This article was written by

Cory Cramer profile picture
One-of-kind research using historical cycles to identify tops and bottoms

My analysis focuses on the cyclical nature of individual companies and of markets in general. I've developed a unique approach to estimating the fair value of cyclical stocks, and that approach allows me to more accurately buy near the bottom of the cycle.

My academic background is in political science and I hold a Bachelor's Degree and a Master's Degree in political theory from Iowa State University. I was awarded a Graduate Research Excellence Award in 2015 for my research on conservatism.

Analyst’s Disclosure: I am/we are long HWKN, BRK.B. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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