The first time I drove into Rochester NY, I was afraid I'd wake up the whole town.
It was late at night and I was driving on a street with one pothole after another. I had never driven over so many potholes in my life. I was at the wheel of a big Ryder truck that contained all my belongings, and was also pulling a car trailer attached to the back. That was a lot of mass to bang across the potholes. You can imagine the racket.
Most potholes are created by the "freeze-thaw cycle," and Rochester is known for lake effect snows in winter and lilacs in spring.
Yet above all, Rochester is known as the home of the Eastman Kodak Company.
I spent four years in Rochester and often drove past the venerable Kodak building -- this gave me a strong sense of the company's history, including the countless families who stored their treasured memories in photo albums.
As I write, Eastman Kodak stock is trading at 44 cents. On July 1, 1999, shares were trading at $75.62.
As you may know, the Wall Street Journal reported (1/5) that "Eastman Kodak Co. is preparing to seek bankruptcy protection in the coming weeks...a move that would cap a stunning comedown for a company that once ranked among America's corporate titans."
Of course, Eastman Kodak is not the first company to face a change for the worse. Xerox Corporation was likewise founded in Rochester. In February 1999, its shares traded at over $55. I see it trading now at $8.06.
Moreover, both Eastman Kodak and Xerox were two of the "glamour" stocks of the 1960s and 1970s, in a larger group of companies with the nickname "The Nifty Fifty." This group was widely recommended as solid for the long run.
"When the stock market overall ended its bear market in the fourth quarter of 1974, the Nifty Fifty had fallen substantially from their highs, and many investors continued to hold them under the belief that they would come roaring back. But they underperformed most other groups of stocks throughout the rest of the 1970s and into the 1980s...Investors in these big-name stocks were stuck in so many shares they wanted to sell that they created an 'overhang' that kept prices dampened for years after their glory days ended in 1973."
Elliott Wave Theorist, September 2009
We know how much the Dow Jones Industrials have changed over the decades. Many investors today wouldn't even recognize the names of "blue chip" companies from days gone by.
Point being, companies favored by the conventional wisdom as good for the long run may not even live to see the "long run," let alone perform well along the way.
In our just-published January 2012 Elliott Wave Financial Forecast, you'll see a chart of a well-known "blue chip" firm which appears to be ready for a "meltdown."
The latest Elliott Wave Financial Forecast does not say this famous corporation will soon go out of business. Yet the chart does show a clearly labeled Elliott wave structure that should be of interest to investors.
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