Last year, Berkshire Hathaway bought out the remaining shares of
the U.S. railway Burlington Northern. It was seen as a vote of
confidence in both the sector and its importance to the U.S.
economic recovery. But is the transportation exchange traded fund (
) backing that up?
It turns out that Buffett's insight into the nature of the
economy and the rail industry proved to be right on track after his
$27 billion buyout.
Eugene Bukoveczky for Investopedia reports that
the railway companies tanked hard with the rest of the economy in
the recession, but the rebound in shipments so far this year has
proved to be much stronger than expected. [
Why Transportation Is Crucial to the Recovery.
The U.S. economy is on the mend, and while the chances that this
momentum will carry forward for the next couple of quarters is
enough of a reason to be a buyer of the railways at this juncture,
there are also sound arguments to be long the sector in the long
- First-quarter earnings numbers were stellar
- Carloads are on the rise
- Volumes of all types of goods saw healthy gains
It's a sign that things are moving in the right direction. Will
it continue? Only time will tell. You can ride the rails with one
ETF; have your buy and sell strategy firmly in place before you
For more stories about transportation, visit our
iShares Dow Jones Transportation Average (NYSEArca:
This is a play on this cyclical sector, providing exposure to
package carriers, freight carriers and airliners.